Daily Market Wrap

Monday, July 27, 2020

By FSDH Research

Market Insight– The Nigerian equities market started the week on a positive note with both the All-Share Index and the NSE-30 Index traded positive today with All-Share Index (ASI) YTD return settling at -7.67 percent. On the sectoral front, key sector indices showed a mixed performance. The Banking (+3.71 percent) and Industrial (+3.34 percent) sectors recorded gains, while the Oil & Gas (-5.70 percent), Insurance (-1.81 percent), and Consumer Goods (-0.32 percent) sectors ended lower. We advise investment in high 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 1.46 percent to close at 24,783.61 points.
  • The market cap of equities listed on the NSE increased to ₦12.929 trillion from ₦12.743 trillion
  • Market breadth was negative with 15 gainers as against 19 losers

NSE 30

  • The NSE 30 Index increased by 1.73 percent
  • Lafarge Africa Plc and Guaranty Trust Bank were the key gainers, while Seplat Petroleum and Julius Berger were the key losers

Money Markets

  • The Overnight (O/N) rate declined by 0.33 percent to close at 1.88 percent
  • The Open Buy Back (OBB) rate also declined by 0.48 percent to close at 1.13 percent

Going into this week, we expect that the money market rates are likely to increase as FGN Bond maturities worth ₦49.61 billion may not be adequate to support system liquidity. Furthermore, an OMO auction by the CBN could exert upward pressure on the money market rates by the end of the week.

The CBN recorded another FX reserve drawdown as FX outflows outpaced inflows. FX reserves declined by $86.69 million WTD to $36.00 billion. In the I&E FX market, trade volumes remained subdued due to tightened liquidity. Naira appreciated marginally by 0.06 percent as the dollar was quoted at ₦389.25 as compared to ₦389.50 on the previous day. Most participants maintained bids between ₦361.00 and ₦390.94 per dollar.

Treasury Bills

  • NT-bills market closed on a flat note with average yield across the curve remaining unchanged at 1.75 percent.

The CBN is expected to roll over NT-bills maturities worth ₦265.95 billion across 91-day (₦49.84 billion), 182-day (₦54.59 billion), and 364-day (₦161.52 billion) tenors this week. We expect subdued demand in the secondary Treasury bills market as investors are likely to focus on the primary market auction.

  • In the OMO bills market, average yield across the curve declined by 16 bps to close at 4.48 percent

Bond Markets

The FGN bond market closed on a positive note today, as the average bond yield across the curve cleared lower by 5 bps to close at 4.16 percent

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