Daily Market Wrap

Tuesday, 8 September 2020

EQUITIES The Nigerian equity market closed on a negative note today as All Share Index decreased by 0.33 percent to close at 25,497.32 points. The market cap of equities listed on the NSE declined to ₦13.302 trillion from ₦13.346 trillion as on the previous day. The total volume traded closed with an exchange of 251.964 million units valued at ₦2.04 billion traded in 4,185 deals. The market breadth was negative with 10 gainers as against 19 losers.

The NSE 30 Index decreased by 0.41 percent to close at 1,082.94 points as against 1,087.39 points as on the previous day. Market turnover closed with traded volume of 195.84 million units. Nigerian Breweries and FBN Holdings were the key gainers, while Guaranty and UBN were the key losers.

MONEY MARKET As of September 8, the Overnight (O/N) rate declined by 0.15 percent to close 2.10 percent as against the last close of 2.25 percent, and the Open Buy Back (OBB) rate also declined by 0.08 percent to close at 1.30 percent from 1.38 percent on the previous day. We expect the money market rates to remain in the single-digit corridor for the rest of the week due to maturing OMO bills and NT-Bills. However, the CBN is likely to float an OMO auction to mop-up excess liquidity.

FX: At the I&E FX market, Naira depreciated by 0.05 percent as the dollar was quoted at ₦386.21 as compared to ₦386.00 on the previous day. Most participants maintained bids between ₦384.00 and ₦394.63 per dollar. FX liquidity remained relatively stable with lower trading volumes. We expect the FX sales by the CBN to BDC operators to increase liquidity in the retail segment of the FX market and reduce the pressure on the Naira.

TREASURY BILLS NT-Bills market closed on a positive note with average yield across the curve declining by 3 bps to close at 1.94 percent from 1.97 percent on the previous day. Average yields across short-term and medium-term maturities compressed by 9 bps and 1 basis point, respectively, while the average yield across long-term maturities remained unchanged at 2.66 percent. Maximum buying interest was seen in the NTB 29-Oct-20 (-23 bps), NTB 12-Nov-20 (-18 bps), and NTB 26-Nov-20 (-14 bps) maturity bills.

At the Primary Market Auction scheduled tomorrow, the CBN is anticipated to offer NT-bills worth ₦128.06 billion (86.49 percent of the expected maturing NT-Bills worth ₦148.06 billion) across the 91-day (₦4.41 billion), 182-day (₦14.00 billion), and 364-day (₦109.65 billion) tenors.

In the OMO bills market, average yield across the curve declined by 18 bps to close at 2.57 percent as against the last close of 2.75 percent. Buying interest was witnessed across short-term, medium-term, and long-term maturities with average yields falling by 18 bps, 19 bps, and 19 bps, respectively. Yields on 17 bills declined with the 12-Jan-21 maturity bill registering the highest yield decline of 65 bps, while yields on 5 bills advanced with the 17-Sep-20 maturity bill recording the highest yield increase of 49 bps.

BONDS The FGN bond market closed on a positive note today, as the average bond yield across the curve cleared lower by 5 bps to close at 4.64 percent from 4.69 percent on the previous day. Average yields across medium and long tenor of the curve declined by 21 bps and 36 bps, respectively, while the average yield across short tenor of the curve increased by 2 bps. The 14-MAR-2024 maturity bond was the best performer with a decline in yield of 102 bps, while the 17-MAR-2027 maturity bond was the worst performer with an increase in yield of 35 bps.

We expect the bullish sentiment to accelerate as local investors continue to be positioned for expected inflows from OMO bills maturities this week as well as FGN Bond coupon payments scheduled from next week.

By FSDH Research

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