Daily Market Wrap

Monday, August 10, 2020

Market Insights-The Nigerian equities market reversed its direction and closed in the red today with both the All-Share Index and the NSE-30 Index trading lower. On the sectoral front, key sector indices showed a mixed performance. The Industrial (-0.41 percent) and Banking (-0.04 percent) sectors ended lower, while the Insurance (+0.96 percent), Consumer Goods (+0.33 percent), and Oil & Gas (+0.08 percent) sectors recorded gains. 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 negative note today as All Share Index decreased by 0.06 percent to close at 25,027.61 points.
  • The market cap of equities listed on the NSE decreased to ₦13.056 trillion from ₦13.063 trillion
  • Market breadth was positive with 18 gainers as against 11 losers.

NSE 30

  • The NSE 30 Index decreased by 0.07 percent
  • Unilever Nigeria and Guinness Nigeria were the key gainers, while Eco Bank Transnational Inc (ETI) and UBA were the key losers.

Money Markets

  • The Overnight (O/N) rate declined by 1.04 percent to close at 6.13 percent
  • The Open Buy Back (OBB) rate also declined by 1.08 percent to close at 5.25 percent

We expect money market rates to remain subdued as OMO maturities of ₦29.78 billion are expected to support the system liquidity, barring any mop-up activity by the CBN.

Last week, the foreign reserves of CBN experienced a fall as FX outflows continue to surpass inflows, declining by $222.14 million to $35.66 billion as of August 7, 2020. Moreover, the update of spot rate on CBN’s website from ₦361/$ to ₦379/$ is an indication of the step taken by the CBN for the unification of its exchange rate. In the I&E FX market, Naira appreciated by 0.13 percent as the dollar was quoted at ₦385.50 as compared to ₦386.00 as on the closing of the previous week. Most participants maintained bids between ₦359.00 and ₦390.00 per dollar.

Treasury Bills

  • NT-bills market closed on a flat note with average yield across the curve remaining unchanged at 1.71 percent.

Going into this week, the CBN is expected to roll over NT-bills maturities worth ₦56.78 billion across 91-day (₦19.78 billion), 182-day (₦10.00 billion), and 364-day (₦27.00 billion) tenors.

  • The OMO bills market closed on a positive note with average yield across the curve declining by 2 bps to close at 4.04 percent

Bond Markets

  • The FGN bond market closed on a positive note today, as the average bond yield across the curve cleared lower by 1 basis point to close at 4.06 percent

As the liquidity conditions are expected to improve this week, we anticipate the demand to return in the secondary bond market with insignificant supply volumes. Furthermore, the DMO has resumed its offer for the FGN Savings Bond, and the offer for subscriptions has been started from today and will close on August 14.

Culled from FSDH Research

For the Full Report click on link below: