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Election delay takes toll on equities

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Nigeria stock exchange
Nigeria stock exchange

MON, FEBRUARY 18 2019-theG&BJournal- The Nigeria’s equities market started the week on a bearish note as the impact of the 11th-hour general election delay significantly weighed on investors’ appetite for naira risk assets. Instructively, the benchmark index dipped by 1.61% to 32,190.07 points on account of sell-offs across major counters.

Accordingly, the Month-to-Date and Year-to-Date gains tapered to 5.34% and 2.42%, respectively.

‘’The sell-off was broad-based as we witnessed marked declines across all sectors.  Notably, the Banking (-3.21%), Oil and Gas (-2.92%), Consumer Goods (-1.54%), Industrial Goods (-1.16%), and Insurance (-1.16%) indices closed in the red on account of sell-offs across GUARANTY (-3.82%), TOTAL (-7.32%), NB (-9.64%), DANGCEM (-0.36%) and WAPIC (-4.65%),’’ says analysts at CORDROS Capital

Market breadth was negative, with 12 gainers and 37 losers, led by TRANSCORP (-9.94%) and PRESCO (+10.00%) respectively. Total volume of trades moderated by 71.22% to 232.75 million units, valued at NGN3.36 billion respectively, and exchanged in 4,134 deals.

Amidst the still heated political environment which greeted the shocking election postponement, we guide investors to trade cautiously in the short term. However, stable macroeconomic fundamentals and attractive valuations remain supportive of recovery in the medium-to-long-term.

The naira appreciated against the dollar by 0.56% to NGN360 in the parallel market, while it depreciated marginally by 0.12% to NGN362.07 in the I&E FX window. Total volume of trades in the IEW declined by 43.2% to USD202.14 million in yesterday’s session, with trades consummated within the NGN355.00-NGN363.25/USD band.

The overnight lending rate surged by 858 bps to 26.08 %, as banks funded for the wholesale FX auction. The CBN conducted its usual OMO auction, however, no sales were recorded.

Activities in the Treasury bills market were mixed, albeit with a bullish tilt, as average yield contracted by 2 bps to close at 14.73%. Yields compressed at the short (-2 bps) and long (-4 bps) ends of the curve, following demand for the 10DTM (-28 bps) and 248DTM (-30 bps) bills, respectively. Conversely, a selloff of the 101DTM (+32 bps) led to yield expansion at the mid (+4 bps) segment.

Proceedings in the bond market were bullish, as average yield moderate by 3 bps to 14.63%. Yield compressed at short (-14 bps), driven by demand for the JUL-2021 (-55 bps) bond. Conversely, yield expanded at the mid (+5 bps) segment, following a selloff of the MAR-2027 (+10 bps) bond.-CORDROS CAPITAL.

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