Monday, August 17, 2020
Market Insight– The Nigerian equities market started the week on a negative note with both the All-share Index and NSE 30 closing in the red. The All-share index(ASI) YTD return settled at -6.37 percent. On the sectoral front, key sector indices showed a mixed performance. The Industrial (-0.38 percent) and Banking (-0.24 percent) sectors ended lower, while the Insurance (+2.89 percent), Consumer Goods (+0.23 percent), and Oil & Gas (+0.49 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.
Inflation. Today, the National Bureau of Statistics (NBS) released its July 2020 inflation report, indicating an increase in the headline inflation by 26 bps to 12.82 percent from 12.56 percent recorded in June 2020. Headline inflation has consecutively risen for 11-months and is mainly driven by food inflation.
- The Nigerian equity market closed on a negative note today as All Share Index decreased by 0.27 percent to close at 25,132.67 points.
- The market cap of equities listed on the NSE declined to ₦13.111 trillion from ₦13.146 trillion
- The market breadth was positive with 17 gainers as against 15 losers.
- The NSE 30 Index decreased by 0.21 percent
- Unilever Nigeria and Julius Berger were the key gainers, while International Breweries and Sterling Bank were the key losers today.
- The Overnight (O/N) rate declined by 2.30 percent to close at 17.50 percent
- The Open Buy Back (OBB) rate also declined by 1.20 percent to close at 16.40 percent
The money market rates are expected to decline further due to an inflow from OMO bills maturities worth ₦181.36 billion.
Forex turnover at the Investor and Exporters (I&E) window recorded a significant decline. Naira appreciated marginally by 0.06 percent as the dollar was quoted at ₦385.78 as compared to ₦386.00 as on the previous day. Most participants maintained bids between ₦380.00 and ₦390.00 per dollar.
- NT-Bills market closed on a positive note with average yield across the curve declining by 14 bps to close at 1.44 percent
- In the OMO bills market, average yield across the curve remained unchanged at 4.01 percent.
- The FGN bond market closed on a positive note today, as the average bond yield across the curve cleared lower by 10 bps to close at 4.66 percent
Going into this week, the DMO is expected to offer FGN bonds worth ₦150 billion through re-opening of 10-year (₦25 billion), 15-year (₦40 billion), 25-year (₦45 billion), and 30-year (₦40 billion) tenors. The bond auction is scheduled on August 19 with the settlement on August 21, 2020. We expect investors’ focus to be shifted to the Primary Market Auction due to the increased supply of ₦20 billion as compared to the last FGN bond auction for July 2020.
By FSDH Research.