Tuesday, August 18, 2020
Market Insight– The Nigerian equities market reversed its direction and closed in the green today with both the All-Share Index and the NSE-30 Index trading higher. Moreover, the All-Share Index (ASI) YTD return settled at -6.35 percent. On the sectoral front, key sector indices showed a mixed performance. The Insurance (+0.89 percent), Banking (+0.52 percent) sectors recorded gains, while the Industrial (-0.02 percent), Oil & Gas (-1.83 percent) and Consumer Goods (-0.12 percent) sectors ended lower. 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 0.02 percent to close at 25,136.49 points.
- The market cap of equities listed on the NSE increased to ₦13.113 trillion from ₦13.111 trillion
- The market breadth was positive with 16 gainers as against 13 losers.
NSE 30
- The NSE 30 Index increased by 0.06 percent
- Sterling Bank and Dangote Sugar were the key gainers, while FCMB Group Plc and Nigerian Breweries were the key losers today.
Money Market
- The Overnight (O/N) rate declined by 1.50 percent to close at 16.00 percent
- The Open Buy Back (OBB) rate also declined by 1.15 percent to close at 15.25 percent
We expect the money market rates to moderate further, given the buoyant liquidity from maturing OMO bills.
FX
The FX market remained supply constrained as the Investor and Exporters (I&E) window continued to trade leanly due to lower trade volumes. Naira weakened marginally by 0.05 percent as the dollar was quoted at ₦385.98 as compared to ₦385.78 as on the previous day. Most participants maintained bids between ₦380.00 and ₦386.00 per dollar.
Treasury Bills
- NT-Bills market closed on a positive note with average yield across the curve declining by 2 bps to close at 1.42 percent
- In the OMO bills market, average yield across the curve declined by 6 bps to close at 3.95 percent
We expect improved system liquidity from maturing OMO bills worth ₦181.4 billion as well as demand from unfilled bids at the last NT-Bills auction to further put downward pressure on yields. Yields on NT-Bills and OMO bills have remained below inflation, which is a major hurdle for the CBN’s push to attract foreign inflows to support the naira.
Bond Markets
- In the FGN bond market, the average bond yield across the curve remained unchanged at 4.66 percent.
Tomorrow, the DMO is anticipated to offer FGN bonds worth ₦150 billion (vs. ₦130.0 billion offered last month) across four tenors at the Primary Market Auction. Auction is expected to witness robust demand across all tenors on offer as investors seek to lock in funds at attractive yields. Furthermore, we expect the stop rates to moderate amid higher demand.
By FSDH Research