Daily Market Wrap

Friday, July 17, 2020

Market Insight– The Nigerian equities market reversed its direction and closed in the red today, after recording gains for two consecutive trading sessions. Both, the All-Share Index and the NSE-30 Index traded lower today with All-Share Index (ASI) YTD return settling at -9.52 percent. On the sectoral front, key sector indices showed a mixed performance. The Insurance (-0.87 percent), Banking (-0.81 percent), and Consumer goods (-0.51 percent) sectors closed in the negative territory. The Oil & Gas (+0.67 percent) sector recorded gains, while the Industrial sector remained unchanged. As markets are likely to remain volatile in the near term, we advise investors to accumulate quality stocks with a long term investment horizon.

Market Brief

  • The Nigerian equity market closed on a negative note today, as All Share Index decreased by 0.17 percent to close at 24,287.66 points.
  • The market cap of equities listed on the NSE declined to ₦12.670 trillion from ₦12.692 trillion
  • Market breadth was negative with 10 gainers as against 12 losers

NSE 30

  • The NSE 30 Index decreased by 0.22 percent
  • Fidelity Bank Plc and Access Bank were the only gainers, while Nigerian Breweries and Guaranty Trust Bank were the key losers

Money Markets

  • The Overnight (O/N) rate increased by 18.33 percent to close at 21.75 percent
  • The Open Buy Back (OBB) rate also increased by 17.67 percent to close at 20.33 percent

The National Bureau of Statistics (NBS) released its June 2020 inflation report, indicating an increase of 16 bps in the headline inflation rate to 12.56 percent from 12.40 percent recorded in May. The increase in all COICOP divisions has resulted in an increase in the headline inflation rate, which marks the sixth consecutive month of higher inflation in 2020. It is worth noting that inflation has increased as a result of continued border closures and restrictions on access to FX, which has resulted in disruption in domestic manufacturing.

In the I&E FX market, trade volumes remained relatively stable, although trading is affected by tightened liquidity in recent times. Naira weakened further by 0.13 percent as the dollar was quoted at ₦388.50 as compared to ₦388.00 on the previous day. Most participants maintained bids between ₦380.00 and ₦390.00 per dollar.

Treasury Bills

  • NT-bills market closed on a negative note today, with average yield across the curve increasing by 9 bps to close at 1.92 percent
  • In the OMO bills market, average yield across the curve declined by 10 bps to close at 5.60 percent

Bond Markets

  • The FGN bond market closed on a negative note today, as the average bond yield across the curve cleared higher by 20 bps to close at 4.35 percent

On July 16, the NSE listed Series 1 Bond worth ₦11.50 billion of Axxela Funding 1 Plc issued under its ₦50.00 billion Bond Programme. The bonds were issued in the domestic capital market through a special purpose vehicle, named as Axxela Funding 1 Plc. The offer had opened on March 27 and closed on May 11. The Seven Year Fixed Rate Bond has a coupon rate of 14.30 percent, which will be paid on a semi-annual basis.

Culled from FSDH Research