NIGERIA | Daily Market Wrap | 22-Feb-2018 | Elixir Research


22 Feb NIGERIA | Daily Market Wrap | 22-Feb-2018 | Elixir Research

Market Wrap | Bond yield takes cue from PMA as Stocks advance further



Bond yield takes cue from PMA


  • Notwithstanding an inflow of about ₦29 billion, the banking system balance opened lower at ₦140.51 billion from ₦193.85 billion while the standing lending window (SLF) balance fell to ₦52.32 billion from ₦63.04 billion a day ago. The overnight rate and OBB fell by 3.08 and 2.17 percent points to 10.17% and 9.83% respectively. 
  • The average T-Bill yield compressed by 7 basis points to 15.16%, given increased interest which saw demand for most maturities across the curve. Save the handful of demand at the tail-end of the bond market, sentiment in the market was generally negative with the average bond yield expanding by 6 basis point to 13.96%. Secondary market yields are adjusting to the primary market level. 
  • The DMO at its bond auction on Wednesday, reported a total sale of ₦80 billion lower than scheduled, (Offer: ₦100 billion) across the re-opened 5-year bond and a newly issued 10-year note at stop rates of 13.70% and 13.98% respectively. 
  • Assuming the CBN continues to hold off on OMO sales, we expect stronger buying at the T-Bill market while the bond market should remain soft as it adjusts to primary market level.


Naira weakens at I&E window




  • The Naira fell by 0.07% against the Dollar at the IEW whilst it closed flat at the parallel market at ₦360.66/$ and ₦362/$ respectively. At the CBN window, the local currency was down by 0.16% to ₦306.50/$. 
  • At the IEW, transaction volume dropped to $195.23 million from $223.38 million on Wednesday.


Stocks advance further




  • Nigerian stocks consolidated on the meagre 0.02% gain recorded at the last session as renewed interest and bargain hunting lifted market generally. The benchmark index added 0.24% to close at 42,258.78 points, bringing the year-to-date return to 10.50%. 
  • Sector performance improved significantly as most sectors closed in the green excluding the consumer goods sector, which was the only dull spot on the day. The banking index gained +0.71% following the interest in UBA (+3.17%), FBNH (+3.14%), ACCESS (+1.57%), ZENITHBANK (+0.79%) and UBN (+0.74%). The industrial index closed up by +0.17%, pushed by WAPCO (+0.49%). The oil & gas index was up +0.70%, lifted by the gains in TOTAL (+4.78%). The consumer goods index shed -0.34%, on the back of the losses in NB (-1.29%), DANGSUGAR (-2.73%) and INTBREW (-0.18%). The insurance index was up 0.26%. 
  • Market breadth index was positive as the session recorded 24 gainers and 17 losers. FIDELITYBK topped activity chart by volume, accounting for 18.38% of the market while ZENITHBANK, GUARANTY and UBA accounted for 45.95% of market value. 
  • Market sentiment appears relatively fragile given the thin spread in the market breath index. This leaves room for limited upside in the short-term, though, bargain hunting for recently beaten down stocks should provide some support for the market.