Thursday, August 20, 2020
Market Insight: Market Insight- The Nigerian equities market continued to trade higher today with both the All-Share Index and the NSE-30 Index closing in the green. Moreover, the All-Share Index (ASI) YTD return settled at -6.10 percent. On the sectoral front, key sector indices showed a mixed performance. The Banking (+0.18 percent), Consumer Goods (+0.52 percent), and Industrial (+0.03 percent) sectors recorded gains, while the Insurance (-0.23 percent) sector ended lower. The Oil & Gas sector remained unchanged. 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 0.13 percent to close at 25,204.58 points.
- The market cap of equities listed on the NSE increased to ₦13.149 trillion from ₦13.131 trillion
- The market breadth was positive with 17 gainers as against 11 losers.
NSE 30
- The NSE 30 Index increased by 0.15 percent
- International Breweries and Access Bank were the key gainers, while UBA was the only loser today.
Money Markets
- The Overnight (O/N) rate declined by 7.20 percent to close at 6.30 percent
- The Open Buy Back (OBB) rate also declined by 7.40 percent to close at 5.60 percent
Money market rates dropped by an average of 730 bps as the system liquidity improved following the OMO maturities worth ₦180.63 billion. The CBN is expected to conduct an OMO auction to mop-up excess liquidity.
FX
On August 19, FX liquidity in the I&E FX market improved as turnover rose to a whopping $227 million, the highest daily turnover in the last two months. CBN’s intervention in the FX market is likely to meet the increased dollar demand due to the expected resumption of international flights. Naira remained stable at ₦386.00 per dollar. Most participants maintained bids between ₦380.00 and ₦386 per dollar.
Treasury Bills
- NT-Bills market closed on a negative note with average yield across the curve increasing by 6 bps to close at 1.51 percent
- In the OMO bills market, the average yield across the curve declined by 9 bps to close at 3.75 percent
Bond Markets
- 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 4.74 percent
FGN Bond Auction for August 2020 was oversubscribed by 61.49 percent (₦92.23 billion) due to excess liquidity in the market. Demand was robust across all the tenors with bid-to-cover ratios settling at 1.31x (10-year), 1.22x (15-year), 1.03x (25-year), and 2.86x (30-year). The DMO allotted bonds worth ₦116.65 billion through competitive bids across the 10-year (₦25.42 billion), 15-year (₦21.45 billion), 25-year (₦16.09 billion), and 30-year (₦53.69 billion) tenors at marginal rates of 6.70 percent (+70 bps), 9.35 percent (-15 bps), 9.75(-5 bps) percent, and 9.90 percent (-5 bps), respectively. Additionally, the DMO allotted bonds worth ₦9.5 billion through non-competitive bids across 10-year (₦8 billion) and 20-year (₦1.5 billion) tenors. In total, the DMO raised ₦126.15 billion (84.10 percent of the total amount offered).
By FSDH Research
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