Daily Market Wrap

Thursday, July 23, 2020

By FSDH Research

Market Insight– The Nigerian equities market reversed its direction and closed in the green today, after recording losses for four consecutive trading sessions. Both, the All-Share Index and the NSE-30 Index traded higher today with All-Share Index (ASI) YTD return settling at -8.68 percent. On the sectoral front, key sector indices showed a mixed performance. The Industrial sector (+3.26 percent) was prominent gainer followed by the Insurance sector, which ended with gains of 0.12 percent. On the other hand, Consumer goods (-0.23 percent) sector ended lower, along with Banking (-0.08 percent) and Oil & Gas (-0.04 percent) sectors. 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 positive note today, as All Share Index increased by 1.40 percent to close at 24,512.27 points.
  • The market cap of equities listed on the NSE increased to ₦12.787 trillion from ₦12.610 trillion
  • Market breadth was neutral with 11 gainers as against 11 losers.

NSE 30

  • The NSE 30 Index increased by 1.65 percent
  • Dangote Cement and Custodian Investment Plc were the key gainers, while BUA Cement Plc and Dangote Sugar were the key losers

Money Markets

  • The Overnight (O/N) rate declined by 0.13 percent to close at 2.38 percent as against 2.51 percent
  • The Open Buy Back (OBB) rate also declined marginally by 0.02 percent to close at 1.88 percent

In the I&E FX market, trade volumes remained very low as it remains affected by tightened system liquidity. Naira appreciated marginally by 0.04 percent as the dollar was quoted at ₦388.00 as compared to ₦388.17 on the previous day. Most participants maintained bids between ₦380.00 and ₦389.50 per dollar.

Treasury Bills

  • NT-bills market closed on a positive note today, with average yield across the curve declining by 2 bps to close at 1.73 percent
  • In the OMO bills market, average yield across the curve increased by 13 bps to close at 4.98 percent

Bond Markets

  • The FGN bond market closed on a positive note today, as the average bond yield across the curve cleared lower by 4 bps to close at 4.25 percent
  • Buying interest was witnessed across short and long tenor of the curve with average yields declining by 1 basis point and 47 bps, respectively. However, the average yield across medium tenor of the curve remained unchanged.

FGN Bond Auction for July 2020 was oversubscribed significantly by 262 percent (₦470.13 billion) due to healthy liquidity in the market. Demand was robust across all the tenors with bid-to-cover ratios for 10-year, 15-year, 25-year, and 30-year bonds settling at 2.88x, 1.72x, 3.72x, and 5.93x, respectively. The DMO allotted bonds worth ₦177.00 billion through competitive bids across the 10-year (₦25.00 billion), 15-year (₦42.00 billion), 25-year (₦75.00 billion), and 30-year (₦35.00 billion) tenors at marginal rates of 6.00 percent (-200 bps), 9.50 percent (-150 bps), 9.80 percent, and 9.95 percent (-220 bps), respectively. Additionally, the DMO allotted bonds worth ₦1.52 billion through non-competitive bids for the 30-year tenor. In total, the DMO raised ₦178.52 billion (37 percent more than the amount offered).

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