Daily Market Wrap

Wednesday, September 9, 2020
The Nigerian equity market closed on a negative note today as All Share Index decreased by 0.28 percent to close at 25,424.91 points. The market cap of equities listed on the NSE declined to ₦13.264 trillion from ₦13.302 trillion as on the previous day. The total volume traded closed with an exchange of 269.630 million units valued at ₦2.87 billion traded in 4,155 deals. The market breadth was negative with 7 gainers as against 23 losers.

The NSE 30 Index decreased by 0.32 percent to close at 1,079.43 points as against 1,082.94 points as on the previous day. Market turnover closed with traded volume of 181.63 million units. Custodian and FCMB were the key gainers, while Unilever and UBA were the key losers.

As of September 9, the Overnight (O/N) rate increased by 0.28 percent to close 2.38 percent as against the last close of 2.10 percent, and the Open Buy Back (OBB) rate also increased by 0.20 percent to close at 1.50 percent from 1.30 percent on the previous day. With the current levels of buoyant system liquidity, we expect the money market rates to remain subdued. Moreover, the CBN is expected to conduct an OMO auction to mop-up excess liquidity arising from NT-Bills and OMO bills maturities.
FX: At the I&E FX market, Naira appreciated by 0.05 percent as the dollar was quoted at ₦386.00 as compared to ₦386.21 on the previous day. Most participants maintained bids between ₦380.00 and ₦386.63 per dollar. Resumption of the FX sales has led to an improvement in trading activities. As of September 7, the average volume traded was $64.7 million which is an increase of 58.6 percent and 45.1 percent over July and June’s average volume traded of $40.8 million and $44.6 million, respectively.

NT-Bills market closed on a positive note with average yield across the curve declining by 6 bps to close at 1.88 percent from 1.94 percent on the previous day. Average yields across short-term and medium-term maturities compressed by 2 bps and 23 bps, respectively, while the average yield across long-term maturities widened by 4 bps. Maximum buying interest was seen in the NTB 25-Feb-21 (-29 bps), NTB 11-Feb-21 (-26 bps), and NTB 28-Jan-21 (-23 bps) maturity bills. At the Primary Market Auction held today, the CBN offered NT-bills worth ₦128.06 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 2 bps to close at 2.54 percent as against the last close of 2.56 percent. Buying interest was witnessed across short-term maturities with the average yield falling by 8 bps, while selling pressure was seen across long-term maturities with the average yield rising by 6 bps. However, the average yield across medium-term maturities remained unchanged at 2.97 percent. Yields on 7 bills declined with the 10-Nov-20 maturity bill registering the highest yield decline of 36 bps, while yields on 3 bills advanced with the 10-Aug-21 maturity bill recording the highest yield increase of 38 bps.

The FGN bond market closed on a positive note today, as the average bond yield across the curve cleared lower by 14 bps to close at 4.50 percent from 4.64 percent on the previous day. Average yields across short, medium, and long tenor of the curve declined by 10 bps, 35 bps, and 13 bps, respectively. The 27-JAN-2022 maturity bond was the best performer with a decline in yield of 46 bps, while the 23-FEB-2028 maturity bond was the worst performer with an increase in yield of 31 bps.

We expect demand from local investors to persist bolstered by relatively excess system liquidity. Furthermore, with the sole monthly FGN bond auction scheduled on September 23, secondary bond market yields could move lower in the short-term.

By FSDH Research
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