21 Feb NIGERIA | Daily Market Wrap | 21-Feb-2018 | Elixir Research
Posted at 17:09h in Market Wrap-up
Market Wrap | Stocks struggle to close in the green as Yields compress in the absence of OMO sales
Yields compress in the absence of OMO sales
- Banking system balance opened higher at ₦193.85 billion from ₦119.09 billion while the standing lending window (SLF) balance rose to ₦63.04 billion from ₦60.97 billion a day ago. The marginal improvement in system liquidity pushed the overnight rate and OBB lower by 6.67 and 7.33 percent points to 13.25% and 12.00% respectively.
- With the absence of CBN’s liquidity tightening week-to-date, interest at the debt market surged significantly, however, skewed to the short end of the market. The average T-Bill yield compressed by 14 basis points to 15.23%, following strong interest across the entire curve, driven by the absence of OMO sales and the expectation of the redemption of bills in Q2-2018 after the successful $2.5 billion Eurobond issuance last week. At the bond market, the average yield trimmed by 2 basis point to 13.91%, supported by demand at the short end of the curve.
- The Debt Management Office (DMO) today conducted a primary market bond auction and is expected to have sold ₦55billion worth of the 5-year bond and ₦65billion worth of the 10-year bond.
- We expect sentiments in the market to continue in the current mood provided the CBN’s do not step-up on its tight stance on liquidity.
Naira weakens at I&E window
- The Naira depreciated by 0.04% against the Dollar at the IEW whilst it closed flat at the parallel market at ₦360.40/$ and ₦362/$ respectively. At the CBN window, the local currency remained at ₦306/$.
- At the IEW, transaction volume improved to $223.38 million from $164.83 million on Tuesday.
Stocks struggle to close in the green
- With the sell-off on the industrial and consumer goods sector, stocks trading marginally ended in positive territory today, lifted by the interest for banking names. The benchmark index gained 0.02% to close at 42,158.32 points, bringing the year-todate return to 10.24%.
- Sector performance was broadly negative excluding the banking sector which emerged as the bright spot on the day. The banking index advanced by +1.06% on the back of the gains in UBA (+3.28%), FBNH (+2.76%), ACCESS (+1.60%), GUARANTY (+1.59%) and ZENITHBANK (+1.45%). The oil & gas index lost -1.20% due to the selloff in CONOIL (-9.58%) and MOBIL (-4.52%). The consumer goods index shed -0.92% following the losses in NB (-2.73%), HONYFLOUR (-2.08%) and NESTLE (-0.72%). The industrial index closed down by -0.89%, largely driven by the losses in CCNN (-4.32%), DUNLOP (-4.17%), CUTIX (-3.51%) and WAPCO (-1.83%). The insurance index was up 0.70%.
- Market breadth index was negative as the session recorded 21 gainers and 30 losers. CUSTODIAN topped activity chart by volume, accounting for 16.56% of the market while GUARANTY, FBNH and NB accounted for 41.26% of market value.
- We expect the market to build on this momentum as we progress into the earnings season amidst a backdrop of strong economic macros.