Daily Market Wrap

Thursday, July 16, 2020

Market Insight- The Nigerian equities market traded higher today as both the All-Share Index (ASI) and the NSE-30 Index closed in the green with All-Share Index (ASI) YTD return settling at -9.36 percent. Major sector indices showed a divergence. The Banking sector was the top gainer (1.01 percent) followed by the Insurance (+0.08 percent) sector. On the other hand, Consumer goods (-0.46 percent) and Oil & Gas (-0.27 percent ) sectors settled lower, while the Industrial sector remained unchanged. The market may remain volatile in the near term. We advise investors to buy quality stocks with a long term investment horizon.

Market Brief

  • The Nigerian equity market closed on a positive note today, as All Share Index increased by 0.83 percent to close at 24,330.06 points.
  • The market cap of equities listed on the NSE increased to ₦12.692 trillion from ₦12.588 trillion
  • Market breadth was positive with 17 gainers as against 16 losers

NSE 30

  • The NSE 30 Index increased by 0.69 percent
  • Presco and MTN Nigeria Communications Plc were the key gainers, while Eco Bank Transnational Inc (ETI) and Unilever Nigeria were the key losers

Money Markets

  • The Overnight (O/N) rate declined by 7.37 percent to close at 3.42 percent
  • The Open Buy Back (OBB) rate also declined by 7.33 percent to close at 2.67 percent

Money market rates dropped by an average of 735 bps as system liquidity improved following OMO maturities of ₦69.55 billion and NT-bills maturities of ₦107.05 billion

FX

The I&E FX market remained subdued at large due to tight liquidity conditions. Naira depreciated further by 0.39 percent as the dollar was quoted at ₦388.00 as compared to ₦386.50 on the previous day. Most participants maintained bids between ₦380.00 and ₦390.89 per dollar.

Treasury Bills

  • NT-bills market closed on a positive note today, with average yield across the curve declining by 9 bps to close at 1.83 percent

The CBN held its scheduled Primary Market Auction on July 15, selling NT-Bills worth ₦107.05 billion across the 91-day (₦8.85 billion), 182-day (₦26.60 billion), and 364-day (₦71.60 billion) tenors. The stop rates for the 91-day, 182-day, and 364-day tenors cleared lower at 1.300 percent (-49 bps), 1.800 percent (-11 bps), and 3.350 percent (-4 bps), respectively. The auction was oversubscribed by 77 percent with bid-to-cover ratios settling at 4.73x (91-day), 2.37x (182-day), and 1.32x (364-day).

  • In the OMO bills market, average yield across the curve declined by 3 bps to close at 5.70 percent

Bond Markets

  • The FGN bond market closed on a positive note today, as the average bond yield across the curve cleared lower by 9 bps to close at 4.14 percent

Today, the DMO released its FGN Bonds Issuance Calendar for the third quarter of 2020, with deepening of the sovereign curve by introduction of a new 25-year bond as a 4th tenor on offer. Furthermore, the DMO is expected to offer bonds worth between ₦340-₦460 billion during the quarter through re-opening of 5-year (₦60-₦90 billion), 15-year (₦90-₦120 billion), and 30-year (₦90-₦120 billion) tenors, including the new issue of the 25-year tenor (₦100-₦130 billion).

Culled from FSDH Research