Daily Market Wrap

Monday, 14 September 2020

The Nigerian equity market closed on a positive note today as All Share Index marginally increased by 0.05 percent to close at 25,605.59 points. The market cap of equities listed on the NSE increased to ₦13.358 trillion from ₦13.351 trillion as on the previous day. The total volume traded closed with an exchange of 257.028 million units valued at ₦3.32 billion traded in 3,567 deals. The market breadth was positive with 17 gainers as against 16 losers.

The NSE 30 Index marginally increased by 0.07 percent to close at 1,087.39 points as against 1,086.63 points as on the previous day. Market turnover closed with traded volume of 202.14 million units. Lafarge Africa and Fidelity were the key gainers, while International Breweries and FCMB were the key losers.

As of September 14, the Overnight (O/N) rate declined by 10.75 percent to close at 5.75 percent as against the last close of 16.50 percent, and the Open Buy Back (OBB) rate also declined by 9.50 percent to close at 5.00 percent from 14.50 percent on the previous day. Going into this week, we expect the system liquidity to remain buoyant as inflows from OMO bills maturities worth ₦350.00 billion and FGN Coupon Payment of ₦142.09 billion are expected to hit the system.

FX: At the I&E FX market, Naira remained stable at ₦386.00 per dollar. Most participants maintained bids between ₦383.00 and ₦386.00 per dollar. Moreover, although the CBN continued to intervene across the various FX windows, Gross FX reserves recorded another week of growth with an increase of $61.91 million to $35.77 billion as of September 11, 2020. The FGN is in talks with the World Bank and African Development Bank regarding loans for Covid-19 and budget deficit financing. Disbursements would flow directly into reserves and compensate for exits by FPIs.

NT-Bills market closed on a flat note with average yield across the curve remaining unchanged at 1.72 percent. In the primary market, the CBN plans to roll over 86.77 percent of maturing NT-Bills (₦918.45 billion out of ₦1.06 trillion) between September and November 2020. Therefore, we expect downward pressure on yields in both NT-Bills and OMO segments of the market.

In the OMO bills market, the average yield across the curve declined by 3 bps to close at 2.38 percent as against the last close of 2.41 percent. Buying interest was witnessed across medium-term maturities with the average yield falling by 7 bps. However, average yields across short-term and long-term maturities remained unchanged at 2.35 percent and 2.62 percent, respectively. The highest yield decline was witnessed in the 5-Jan-21 maturity bill, which fell by 86 bps, while the highest yield increase was seen in the 11-May-21 maturity bill, which rose by 3 bps.

The FGN bond market closed on a positive note today, as the average bond yield across the curve cleared lower by 8 bps to close at 4.07 percent from 4.15 percent on the previous day. Average yields across short, medium, and long tenor of the curve declined by 7 bps, 16 bps, and 7 bps, respectively.

The 26-APR-2029 maturity bond was the best performer with a decline in yield of 42 bps, while the FGNSB 13-FEB-2021 bond was the worst performer with an increase in yield of 1 basis point. We expect buying interest to remain elevated as investors seek to re-invest the excess liquidity anticipated this week.