Daily Market Wrap

Friday, September 4, 2020

The Nigerian equity market closed on a positive note today as All Share Index increased by 0.37 percent to close at 25,605.64 points. The market cap of equities listed on the NSE increased to ₦13.358 trillion from ₦13.309 trillion as on the previous day. The total volume traded closed with an exchange of 419.660 million units valued at ₦3.79 billion traded in 4,152 deals. The market breadth was positive with 23 gainers as against 12 losers.

The NSE 30 Index increased by 0.41 percent to close at 1,088.70 points as against 1,084.22 points as on the previous day. Market turnover closed with traded volume of 267.90 million units. Seplat Petroleum and Fidelity Bank Plc were the key gainers, while Custodian Investment Plc and FBN Holdings were the key losers.

As of September 4, the Overnight (O/N) rate declined by 1.00 percent to close at 2.25 percent as against 3.25 percent, and the Open Buy Back (OBB) rate also declined by 0.88 percent to close at 1.63 percent from 2.51 percent on the previous day.

FX: At the I&E FX market, Naira appreciated by 0.03 percent as the dollar was quoted at ₦386.13 as compared to ₦386.25 on the previous day. Most participants maintained bids between ₦380.00 and ₦387.00 per dollar. Latent FX demand from FPIs and manufacturers, in addition to new demand from travellers, could exert pressure on Naira. The CBN could increase the volume of FX sales as travel activities pick up. However, to drive FX rate unification, higher BDC sales may be complemented by an improvement in liquidity at the I&E window.

NT-Bills market closed on a positive note with average yield across the curve declining by 27 bps to close at 2.91 percent from 2.18 percent on the previous day. Average yields across medium-term and long-term maturities compressed by 24 bps and 52 bps, respectively, while the average yield across short-term maturities remained unchanged at 1.22 percent. Maximum buying interest was witnessed in the NTB 1-Jul-21 (-79 bps), NTB 10-Jun-21 (-76 bps), and NTB 13-May-21 (-71 bps) maturity bills.

In the OMO bills market, the average yield across the curve increased by 4 bps to close at 2.81 percent as against the last close of 2.77 percent. Selling pressure was witnessed across short-term maturities (+15 bps), while buying interest was seen across medium-term maturities (-13 bps). However, the average yield across the long-term remained unchanged at 3.22 percent. Yields on 9 bills declined with the 19-Jan-21 maturity bill registering the highest yield decline of 47 bps, while yields on 7 bills advanced with the 17-Nov-20 maturity bill recording the highest yield increase of 74 bps.

The CBN held an OMO auction on September 3, selling bills worth ₦100 billion across the 82-day (₦10 billion), 180-day (₦10 billion), and 355-day (₦80 billion) tenors. The stop rate for 82-day tenor cleared lower at 4.86 percent (-1 basis point), while the stop rates for 180-day and 355-day tenors closed flat at 7.68 percent and 8.94 percent, respectively. The auction was oversubscribed, indicating a subscription level of 145 percent (₦144.66 billion). Demand was skewed towards medium tenor bills with bid-to-cover ratios settling at 1.00x (82-day), 1.80x (180-day), 1.46x (355-day).

The FGN bond market closed on a positive note today, as the average bond yield across the curve cleared lower by 20 to close at 4.75 percent from 4.95 percent on the previous day. Average yields across short and medium tenor of the curve declined by 24 bps and 10 bps, respectively, while the average yield across long tenor of the remained unchanged.

The FGNSB 13-MAR-2021 bond was the best performer with a decline in yield of 53 bps, while the FGNSB 12-SEP-2020 bond was the worst performer with an increase in yield of 1 basis point. We expect increased demand for most of the month, as local banks position ahead of the expected liquidity from OMO bills maturities as well as bond coupon repayments totalling ₦1.4 trillion.

By FSDH Research

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