The equity market trended downward for the second consecutive week as investors stayed on the sidelines last week amidst the build up to the electioneering period. Consequently, the NSE All-Share Index and market capitalisation depreciated by 2.84 per cent to close the week at 39,323.62 points and ₦14.244tn, respectively.
In the same vein, all the sectored gauges fell, with the NSE Banking Index, NSE Insurance Index, NSE Consumer Goods Index, NSE Oil/Gas Index and NSE Industrial Index dropping by 4.38 per cent, 1.80 per cent, 3.62 per cent, 0.19 per cent and 0.01 per cent, respectively to close at 490.66 points, 141.79 points, 939.74 points, 349.40 points and 2,059.02 points, respectively.
During the past week, the suspension of trading in the shares of Ikeja Hotel Plc was lifted as approved by the Quotations Committee of the National Council of the Nigerian Stock Exchange.
The key market indicators may trend northward slightly this new week as investors are likely to take advantage of the low prices of some fundamentally sound stocks
NASD unlisted securities
The free fall in the NASD OTC Market extended for the second consecutive week with a decrease in market metrics, as the NASD USI fell by 1.64 per cent to close at 664.38 points (as against 675.42 points recorded in the previous week). Also, total market capitalisation shed 1.64 per cent to close lower at ₦449.61bn compared to the ₦457.08bn in the previous week.
Money market
The OBB and overnight rates shot significantly higher to 17.17 per cent and 19.67 per cent, respectively. This was due to the OMO and retail FX interventions by the CBN, which mopped up most of the liquidity in the system. The outflows for the week stood at approximately ₦113.31bn as against the ₦266.95bn from maturing treasury bills.
We expect rates to trend slightly lower this week, owing to inflows from FAAC disbursement. This is, however, barring a further OMO intervention sale by the CBN.
Bonds market
The bonds market traded the week largely on a bullish note following significant demand from local clients, especially on the medium tenured bonds (2027s and 2028s) in lieu of the upcoming bond maturity (₦300bn of the 10.7 per cent May 30, 2018).
There was huge demand on the 2028s, which traded as low as 20bps away from auction levels closing (13.40/30). Yields consequently compressed by an average of 12 basis points across the curve.
We expect a slight continuation of demand opening this week, but on a much softer note, with support seen at 13.30 per cent.
Treasury bills market
The T-bills market traded on a relatively flat note as the CBN mopped up liquidity via OMO and retail FX interventions in the interbank market. Yields consequently rose by average of six basis points.
This week, the CBN is expected to sell T-bills amounting to ₦49.6bn via the Primary market; viz: 91-day bills worth ₦4.96bn, 182-day bills worth ₦24.8bn and 364-day bills worth ₦19.84bn, which will partly offset the maturing treasury bills worth ₦192.01bn.
We expect yields to trend slightly lower opening this week as system liquidity is expected to improve following inflows from FAAC payments into the system.
Foreign exchange market
The interbank rate depreciated marginally by 0.01 per cent to ₦305.90/$. This trend is expected to reverse due to continuous accretion of the CBN’s external reserves in direct response to the continuous appreciation of crude oil prices, which have facilitated the continuous intervention of the CBN in the forex market.
The NAFEX rate, however, appreciated by 0.01 per cent to ₦361.39/$, while rates in the unofficial market remained stable at ₦361.50/$.
Meanwhile, the naira remained stable and exchanged for 361.50/$1 in the BDC segment of the market on Friday, May 25, 2018.