Wednesday, July 29, 2020.
By FSDH Research
Market Insight– The Nigerian equities market reversed its direction and closed in the green today. Both, the All-Share Index and the NSE-30 Index ended higher with the All-Share Index (ASI) YTD return settling at -8.00 percent. Performance across the sectors was broadly positive except for the Banking sector, which recorded losses of 0.21 percent. The Oil & Gas (+4.58 percent), Insurance (+1.40 percent), Industrial (+0.27 percent) sectors closed in the green along with minor gains of 0.01 percent in the Consumer Goods sector. The markets may remain volatile in the near term. We advise investments in quality stocks with a long term investment horizon.
- The Nigerian equity market closed on a positive note today as All Share Index increased by 0.18 percent to close at 24,693.73 points.
- The market cap of equities listed on the NSE increased to ₦12.882 trillion from ₦12.859 trillion.
- Market breadth was positive with 18 gainers as against 14 losers.
- The NSE 30 Index increased by 0.19 percent.
- Seplat Petroleum and BUA Cement Plc were the key gainers, while Guinness Nigeria and Eco Bank Transnational Inc (ETI) were the key losers.
- The Overnight (O/N) rate increased by 0.10 percent to close at 2.10 percent
- The Open Buy Back (OBB) rate also increased marginally by 0.07 percent to close at 1.40 percent
As a result of buoyant system liquidity, money market rates are likely to remain at subdued levels with no significant funding pressure by market participants.
I&E FX window observed lower volume passing through the market due to tightened system liquidity. Naira appreciated 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 ₦380.00 and ₦391.50 per dollar.
- In the NT-bills market, average yield across the curve remained unchanged at 1.75 percent.
At the Primary Market Auction held today, the CBN offered NT-Bills worth ₦265.95 billion across 91-day (₦49.84 billion), 182-day (₦54.59 billion), and 364-day (₦161.52 billion) tenors.
The OMO bills market closed on a positive note with average yield across the curve declining by 20 bps to close at 4.23 percent
- The FGN bond market closed on a negative note today, as the average bond yield across the curve cleared higher by 7 bps to close at 4.09 percent
The FGN total debt service cost for the external obligations have added up to $473 million in 1Q20, an increase of $116 million as compared to the prior period. Despite the domestic lockdown, adversely affected oil prices and the production restraints, debt servicing costs are perceived to be manageable. It should be noted that average borrowing costs from the World Bank, the African Development Bank, and Exim Bank of China were 1.1 percent, 2.0 percent, and 2.8 percent, respectively. On the other hand, FGN’s average borrowing costs stood at 7.5 percent. Furthermore, if the foreign exchange risk is not considered, for the time being, the external debt was less costly as compared to domestic debt; even factoring in the decline in the NT-Bills and FGN Bond rates.
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