Daily Market Wrap

Wednesday, Septemeber 2, 2020

The Nigerian equity market closed on a positive note today as All Share Index increased by 0.18 percent to close at 25,460.00 points. The market cap of equities listed on the NSE increased to ₦13.282 trillion from ₦13.258 trillion as on the previous day. The total volume traded closed with an exchange of 181.321 million units valued at ₦1.12 billion traded in 3,408 deals. The market breadth was positive with 18 gainers as against 11 losers.

The NSE 30 Index increased by 0.23 percent to close at 1,082.08 points as against 1,079.57 points as on the previous day. Market turnover closed with traded volume of 74.65 million units. Sterling Bank and Fidelity Bank Plc were the key gainers, while FCMB Group Plc and Lafarge Africa Plc were the key losers.

As of September 2, the Overnight (O/N) rate declined by 1.04 percent to close at 5.33 percent as against 6.37 percent, and the Open Buy Back (OBB) rate also declined by 1.08 percent to close at 4.67 percent from 5.75 percent on the previous day. We expect the money market rates to remain subdued for the rest of the week supported by abundant system liquidity and expected inflows from OMO bills maturities.

FX: At the I&E FX market, Naira closed flat at ₦386.00 per dollar. Most participants maintained bids between ₦380.00 and ₦395.13 per dollar. Moreover, Nigeria’s gross official reserves declined by 0.58 percent ($206.37 million) to $35.67 billion in August 2020 from $35.88 billion as on July 29, 2020. The FX sales to the BDC segment of the market could exert additional pressure on the FX reserves as the CBN is expected to fund the backlog of unmet FX demand.

NT-Bills market closed on a flat note with average yield across the curve remaining unchanged at 2.09 percent. Average yields across short-term, medium-term, and long-term maturities closed at 1.22 percent, 1.77 percent, and 3.18 percent, respectively. Buying interest was witnessed only in the NTB 26-Aug-21 maturity bill with a decline in yield of 3 bps.

In the OMO bills market, the average yield across the curve declined by 7 bps to close at 2.92 percent as against the last close of 2.99 percent. Buying interest was witnessed across short-term, medium-term, and long-term maturities with average yields falling by 70 bps, 3 bps, and 11 bps, respectively. Yields on 16 bills declined with the 2-Mar-21 maturity bill registering the highest yield decline of 70 bps, while yields on 3 bills advanced with the 9-Feb-21 maturity bill recording the highest yield increase of 21 bps.

The FGN bond market closed on a negative note today, as the average bond yield across the curve cleared higher by 3 bps to close at 4.94 percent from 4.91 percent on the previous day. The average yield across the short tenor of the curve widened by 4 bps, while the average yields across the medium tenor of the curve declined by 2 bps and the average yield across long tenor of the curve remained unchanged. The 14-MAR-2024 maturity bond was the best performer with a decline in yield of 10 bps, while the 27-JAN-2022 maturity bond was the worst performer with an increase in yield of 18 bps.

According to the Nigerian Capital Importation report by the National Bureau of Statistics (NBS), there were no Foreign Portfolio Investments (PFIs) in the second quarter of 2020 due to a lack of FX liquidity caused by Covid-19 pandemic and a sharp decline in crude oil prices. The apathy shown by PFIs was also due to a low yield environment caused by OMO policy in October 2019. In the first quarter of 2020, PFIs investment stood at $231.22 million. With the PFIs staying out of FGN bonds, it means that local investors now control Nigeria’s debt market.

By FSDH Research

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