Daily Market Wrap

Wednesday, August 5, 2020

Market Insight: The Nigerian equities market maintained its upward trend as both the All-Share Index and the NSE-30 Index traded higher. Performance across the sectors was broadly positive except for the Insurance sector, which recorded a meager loss of 0.01 percent. The Oil & Gas (+0.11 percent) and Banking (+0.07 percent) sectors recorded moderate gains, while the Consumer Goods and Industrial sectors recorded marginal gains of 0.01 percent each. The markets may 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 0.16 percent to close at 24,882.04 points.
  • The market cap of equities listed on the NSE increased to ₦12.980 trillion from ₦12.959 trillion
  • Market breadth was positive with 18 gainers as against 12 losers.

NSE 30

  • The NSE 30 Index increased by 0.15 percent
  • STANBIC IBTC Bank and Guaranty Trust Bank were the key gainers, while Zenith Bank and FCMB Group Plc were the key losers

Money Markets

  • The Overnight (O/N) rate declined by 0.75 percent to close at 9.33 percent
  • The Open Buy Back (OBB) rate also declined by 0.50 percent to close at 8.50 percent

Pressure on the money market rates eased further after Retail FX auction and CRR debits by the CBN on August 3. We expect the money market rates to remain in the single-digit territory as the funding pressure remains low amidst the market players.

At the Investors’ and Exporters’ FX window, turnover remained low due to tightened system liquidity. Naira weakened further by 0.06 percent as the dollar was quoted at ₦389.25 as compared to ₦389.00 on the previous day. Most participants maintained bids between ₦380.00 and ₦392.50 per dollar.

Treasury Bills

  • In the NT-bills market, average yield across the curve declined by 1 basis point to close at 1.70 percent

The expected increase in the demand for the NT-Bills may be impacted this week as a result of liquidity squeeze caused by the absence of any significant inflows into the system.

  • The OMO bills market closed on a negative note with average yield across the curve increasing by 22 bps to close at 3.96 percent

Bond Markets

  • The FGN bond market closed on a negative note today, as the average bond yield across the curve cleared higher by 64 bps to close at 4.60 percent

During this week, the trading volume in the bond market has been impacted due to the low system liquidity. However, we expect the bearishness to reduce as local investors may continue to prefer the FGN bonds with improved yields.

Culled from FSDH Research

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