Daily Market Wrap

Tuesday, August 25, 2020

Market Insight– The Nigerian equities market continued to trade higher 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 -5.78 percent. On the sectoral front, key sector indices showed a mixed performance. The Insurance (+1.62 percent) and Industrial (+1.10 percent) sectors recorded gains, while the Banking (-0.22 percent), Consumer Goods (-0.07 percent), and Oil and Gas (-0.04 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 0.25 percent to close at 25,291.73 points.
  • The market cap of equities listed on the NSE increased to ₦13.194 trillion from ₦13.162 trillion
  • The market breadth was negative with 15 gainers as against 20 losers.

NSE 30

  • The NSE 30 Index increased by 0.37 percent
  • Julius Berger and BUA Cement Plc were the key gainers, while Sterling Bank and Access Bank were the key losers.

Money Markets

  • The Overnight (O/N) rate declined by 0.50 percent to close at 2.50 percent
  • The Open Buy Back (OBB) rate remained unchanged at 2.00 percent.

We expect the money market rates to remain stable at a single-digit level as the system liquidity is expected to improve later in the week.

FX

The resumption of FX sales to the BDC segment of the market has put an additional pressure on the FX reserves as the CBN funds the backlog of unmet FX demand. At the I&E FX window, Naira remained stable at ₦385.99 per dollar. 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 4 bps to close at 1.50 percent

Tomorrow, the CBN is expected to roll over NT-Bills maturities worth ₦197.60 billion across the 91-day (₦20.37 billion), 182-day (₦31.75 billion), and 364-day (₦145.48 billion) tenors.

  • In the OMO bills market, the average yield across the curve declined by 8 bps to close at 3.37 percent

Bond Markets

The FGN bond market closed on a negative note today, as the average bond yield across the curve cleared higher by 1 basis point to close at 4.79 percent

The DMO has a funding target of ₦1.59 trillion for 2020, which is to be fully raised via the domestic market. Till now, the DMO has successfully raised ₦1.61 trillion from FGN bond sales (including receipts from non-competitive bids) in the last eight months this year. However, from this gross proceeds, the DMO has made a repayment on the maturity of about ₦600 billion. We believe that the DMO is well placed to meet its target for the year and could build an additional cushion.

By FSDH Research

For the full report click on the link below:

https://tinyurl.com/MarketWrapAug25