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Bond yields dip 7bps to 7.8% as equity rout persist amid selloffs in major Banking tickers, naira gains 0.1% at the I&E window

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WED, SEPT 09, 2020-theG&BJournal-Treasury bond secondary market remained bullish, as average yield contracted by 7bps to 7.8%. Across the curve, yield contracted at the short (-14bps) and long (-7bps) ends, following buying interest in the JAN-2022 (-46bps) and JUL-2034 (-102bps) instruments, respectively, while they expanded at the mid (+2bps) segment, due to sell-offs of the FEB-2028 (+31bps) instrument.

The overnight lending rate expanded by 28bps to 2.4%, in the absence of any significant inflows into the system.

Trading in the NTB secondary market was bullish, as market participants looked to cover for lost bids at the PMA today. Thus, average yield contracted by 6bps to 1.9%. Across the curve, yield contracted at the short (-2bps) and mid (-23bps) segments, due to demand for the 78DTM (-8bps) and 169DTM (-30bps) instruments, respectively, while they contracted at the long (+3bps) end, following sell-off of the 351DTM (+22bps) instrument. At the PMA, the CBN offered bills worth NGN128.06 billion with allotments of NGN4.41 billion of the 91-day, NGN14.00 billion of the 182-day and NGN109.65 billion of the 364-day – at respective stop rates of 1.10% (previously 1.15%), 1.55% (previously 1.80%), and 3.05% (previously 3.34%). Similarly, average yield contracted by 2bps to 2.5% at the OMO secondary market.

Equities

The bears continued to dominate on the local bourse as selloffs in major Banking tickers – ZENITHBANK (-3.0%), ACCESS (-3.0%) and UBA (-3.2%) persisted. Consequently, the ASI shed 0.3% to close at 25,424.91 points. The Month-to-Date gain moderated to 0.4% while Year-to-Date loss increased to -5.3%.

The total volume traded increased by 7.0% to 269.63 million units, valued at NGN2.87 billion and exchanged in 4,155 deals. ZENITHBANK was the most traded stock by volume at 35.84 million units while GUARANTY was the most traded stock by value at NGN605.14 million.

FIDSON, PZ, CUSTODIAN, WAPCO and FCMB are the top five gainers, all advancing 7.28%, 6.25%, 3.13%, 0.83% and 2.73% respectively.

Across sectors, the Industrial Goods (+0.1%) index was the sole gainer while losses were recorded in the Banking (-1.5%), Insurance (-0.4%), Consumer Goods (-0.2%) and Oil & Gas (-0.1%) indices.

Market sentiment, as measured by the market breadth, was negative (0.3x), as 7 tickers gained relative to 23 losers. ROYALEX (-10.0%) and LIVESTOCK (-9.1%) recorded the largest losses of the day while FIDSON (+7.3%) and PZ (+6.3%) topped the gainers’ list.

Currency

The naira strengthened at the I&E window by 0.1% to NGN386.00/USD, while it weakened by 0.5% to NGN445.00 in the parallel market.-With Cordros Research

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