Daily Market Wrap

Thursday, 10 September 2020

The Nigerian equity market closed on a positive note today as All Share Index increased by 0.38 percent to close at 25,520.97 points. The market cap of equities listed on the NSE increased to ₦13.314 trillion from ₦13.264 trillion as on the previous day. The total volume traded closed with an exchange of 236.481 million units valued at ₦1.65 billion traded in 3,251 deals. The market breadth was positive with 22 gainers as against 12 losers.

The NSE 30 Index increased by 0.43 percent to close at 1,084.07 points as against 1,079.43 points as on the previous day. Market turnover closed with traded volume of 146.77 million units. Access and Zenith were the key gainers, while FCMB and Custodian were the key losers.

As of September 10, the Overnight (O/N) rate declined by 0.18 percent to close 2.20 percent as against the last close of 2.38 percent, and the Open Buy Back (OBB) rate also declined by 0.10 percent to close at 1.40 percent from 1.50 percent on the previous day. We expect the money market rates to remain steady in the near term in the lower single-digit corridor, barring outside the chance of an OMO auction by the CBN.

FX: At the I&E FX market, Naira weakened by 0.04 percent as the dollar was quoted at ₦386.17 as compared to ₦386.00 on the previous day. Most participants maintained bids between ₦383.00 and ₦386.50 per dollar. With an FX backlog estimated at over $5 billion, the CBN could be looking to incentivize FPIs with higher yields to curtail the steady decline in FX reserves.

NT-Bills market closed on a positive note with average yield across the curve declining by 8 bps to close at 1.80 percent from 1.88 percent on the previous day. The average yield across long-term maturities was compressed by 22 bps, while average yields across short-term and medium-term maturities remained unchanged. Maximum buying interest was seen in the NTB 26-Aug-21 (-33 bps), NTB 29-Jul-21 (-28 bps), and NTB 15-Jul-21 (-23 bps) maturity bills. At the Primary Market Auction held on September 9, the CBN sold 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. The stop rates for the 91-day, 182-day, and 364-day tenors cleared lower at 1.10 percent (-5 bps), 1.55 percent (-25 bps), and 3.05 percent (-29 bps), respectively. The auction was significantly oversubscribed by 105 percent, with bid-to-cover ratios settling at 1.95x (91-day), 1.64x (182-day), and 2.11x (364-day).

In the OMO bills market, the average yield across the curve declined by 4 bps to close at 2.50 percent as against the last close of 2.54 percent. Buying interest was witnessed across short-term, medium-term, and long-term maturities with average yields falling by 1 basis point, 8 bps, and 6 bps, respectively. The 2-Mar-21 maturity bill registered the highest yield decline of 75 bps, while the 15-Oct-20 maturity bill recorded the highest yield increase of 16 bps.

The FGN bond market closed on a positive note today, as the average bond yield across the curve cleared lower by 28 bps to close at 4.22 percent from 4.50 percent on the previous day. Average yields across short, medium, and long tenor of the curve declined by 19 bps, 67 bps, and 36 bps, respectively. The 27-APR-2023 maturity bond was the best performer with a decline in yield of 71 bps, while the 23-JUL-2030 maturity bond was the worst performer with an increase in yield of 23 bps.

Yesterday, the DMO released information on the Public Debt Stock as of June 30, 2020. The Total Public Debt Stock increased to ₦31.009 trillion from ₦28.628 trillion as of March 31, 2020. The increase in the Debt Stock by ₦2.381 trillion was attributable to a loan of $3.36 billion from the IMF, New Domestic Borrowing to finance the revised 2020 budget, including the issuance of the Sukuk worth ₦162.557 billion and Promissory Notes issued to settle claims of exporters.

By FSDH Research

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