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Markets Wrap: Equities rebound after a bad start to the week, naira depreciates to N386/USD at I & E window and bond yield contracts 8bps to 7.9%

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WED, AUG 12 2020-theG&BJournal– The domestic equities market regained a positive posture today, following buying interest in AIRTELAFRI (+9.2%) and SEPLAT (+10.0%) stocks.

The benchmark index advanced by 1.0 % to 25,141.48 points. The Month-to-Date gain increased to +1.8% while the Year-to-Date loss moderated to -6.3% on the back of the gain.

The total trade volume declined by 0.8% to 204.88 million units, valued at NGN3.83 billion and exchanged in 3,636 deals. GUARANTY was the most traded stock by volume and value at 66.25 million units and NGN1.65 billion, respectively.

On sectors, the Oil & Gas (+5.2%), Insurance (+0.6%) and Consumer Goods (+0.2%) indices recorded gains, while the Banking (-0.4%) and Industrial Goods (-0.3%) indices closed lower.

Market sentiment, as measured by the market breadth, was positive (1.8x), as 18 tickers gained relative to 10 losers. SEPLAT (+10.0%) and CADBURY (+9.9%) recorded the largest gains of the day, while CHAMPION (-9.3%) and CHIPLC (-8.1%) were the top losers.

Currency

The naira depreciated by 0.1% to NGN386.00/USD at the I&E window while it remained flat at NGN475.00/USD in the parallel market.

Money Market and Fixed Income

The overnight lending rate contracted by 92bps to 5.3%, in the absence of any significant outflows from the system.

Trading in the NTB secondary market was mixed, as market participants shifted their focus to the NTB PMA that held today. Thus, average yield was flat at 1.7%. At the PMA, the CBN rolled over maturing bills worth NGN56.78 billion with allotments of NGN19.78 billion of the 91-day, NGN10.00 billion of the 182-day and NGN27.00 billion of the 364-day – at respective stop rates of 1.20% (previously 1.20%), 1.39% (previously 1.50%), and 3.12% (previously 3.40%). On the other hand, average yield contracted by 5bps to 4.2% at the OMO secondary market.

Elsewhere, trading in the Treasury bond secondary market was bullish, as average yield contracted by 8bps to 7.9%. Across the curve, average yield expanded at the short (+21bps) end, following sell-offs of the JAN-2022 (+212bps) bond, while they contracted at the mid (-4bps) and long (-35bps) segments, due to demand for the MAR-2027 (-11bps) and MAR-2036 (-108bps) bonds, respectively.

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