Weekly Market Wrap - 8 September 2017
Nigerian stock market down 44bps at week close
Despite trading in the positive territory for most of the week, the Nigerian bourse pulled back at week close, shedding 44bps to lower w/w gains to 126bps. Despite the positive w/w performance, we point to negative market breadth and dampened sentiment at week close as indicators of underlying cautious trading. We expect the market to open the week mixed albeit with a bearish tilt given notable pressure on large cap stocks.
Stock Watch: GUINNESS surged 28% this past week following the release of better than expected FY’17 results (PAT: ₦1.9 billion vs. ₦1.0 billion LAT consensus estimate) and ₦0.64 dividend per share announcement (Consensus expectation: ₦0.50). We note that GUINNESS concluded its Rights Issue on 30th of August 2017 at a price of ₦58.00. The stock currently trades at ₦96.33, above consensus target price of ₦72.97, and has returned 16% Ytd.
Yields trend southwards in fixed income market
Amidst the release of GDP figures showing that Nigeria officially exited recession in Q2’17 (0.5% y/y) as well as liquidity injection from Thursday’s OMO maturity of ₦135 billion, trading remained upbeat for most of the week in the T-bills market with yields trending southwards across the space. In the bond market, whilst activity turned upbeat in the first two trading sessions of the week, sentiment quickly turned by Thursday and remained tepid till the end of the week. Amidst sustained OMO auctions from the CBN, we expect a mixed trading sentiment to dominate the T-bills market at week open.
The CBN sustained its consistent interventions through the week, carrying out a spate of currency spot and forward sales. Despite this, the naira depreciated ₦0.10 and ₦0.50 at the official spot market and parallel market to close at ₦305.95 and ₦364.00 respectively against the dollar.
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