The NigeriaN bourse rebounded from the lull experienced in the previous trading session as the key performance indicators closed the past week on a promising note. Consequently, the NSE All-Share Index and market capitalisation appreciated by 0.72 per cent and 0.82 per cent to close the week at 42,876.23 and N15.403tn, respectively. With this, the NSE ASI has posted a 12.11 per cent return year-to-date.
Similarly, all other indices finished higher during the week with the exception of the NSE ASeM, NSE Banking and NSE Pension indices that depreciated by 1.14 per cent, 0.59 per cent and 0.09 per cent, respectively.
During the past week, African Prudential Plc (full year December 31, 2017) recorded a 37.10 per cent increase in turnover to N3.32bn as well as 68.25 per cent increase in profit after tax to N1.72bn. The company also proposed a cash dividend per share of N0.40, which translates to a dividend yield of 8.12 per cent.
We are of the view that the quality of results released by listed companies will largely dictate the direction of the market in this week.
NASD unlisted securities
The NASD OTC market maintained its week-on-week positive momentum, as the NASD USI advanced by 1.46 per cent to close at 674.45 points (as against 664.76 points recorded the previous week). Similarly, the market capitalisation appreciated by 1.46 per cent to close higher at 456.42bn (compared to ₦449.86bn the previous week).
The OBB and Overnight rates rose slightly to close the past week at 9.75 per cent and 10 per cent, respectively. This was a result of the slight squeeze in system liquidity from funding for retail FX bids by banks and OMO sales worth N526.49bn. The outflow outweighed inflows of approximately N369.35bn in matured treasury bills
We expect rates to trend higher at the beginning of this week due to anticipated funding for OMO and wholesale FX sales by the Central Bank of Nigeria, but moderate downward slightly as OMO bills worth N152.93bn are expected to mature.
The bond market traded on a relatively quiet note with slight compression in yields due to slight buy interest on the long end of the curve. Yields compressed marginally by one basis point week-on-week in what was largely flat trading week for bonds.
We expect this trend to persist in this week as the CBN is expected to sustain its intervention in the money market space.
Treasury Bills market
During the past week, the Treasury bills market traded on a relatively bullish note as market players cherry-picked some high-yielding bills. Consequently, yields declined by an average of eight basis points.
The CBN in the week auctioned treasury bills worth N129.99bn via the primary market: viz: 91-day bills worth N12.99bn, 182-day bills worth N64.99bn and 364-day bills worth N51.99bn. Their marginal rates closed at 11.85 per cent, 13.49 per cent and 13.50 per cent, respectively
We expect a slight uptick in yields this week as the CBN resumes its OMO auction and FX interventions.
Foreign exchange market
The CBN official spot rate fell sharply by 0.18 per cent to N305.95/$ from N306.50/$ in the previous session. The spot rate in the Investors and Exporters’ FX Window depreciated by 0.01 per cent to close at N360.70/$ from N360.66/$ in the previous session.
Rates in the unofficial market also depreciated by 0.03 per cent to N360.80/$, from its previous rate of N360.70/$.
During the past week, the CBN injected $210m into the foreign exchange market of which $100m was allocated to wholesale (SMIS), $55m was allocated to Small and Medium-scale Enterprises and $55m was sold for invisibles.
The interbank foreign exchange markets are expected to remain fairly stable this week.
Macro economy news
Nigeria’s real Gross Domestic Product grew year-on-year by 1.92 per cent to N18.56tn in the fourth quarter of 2017, the third consecutive growth in eight quarters; stronger than the 1.40 per cent growth of N17.80tn registered in the third quarter. The growth in real output was more broad-based across the oil, agricultural, trade, manufacturing and services sectors. This is a quite departure from the quality of growth in the preceding quarter when oil and agricultural sectors dominated.
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