Equities Market Ends 8-Weeks of Consistent Decline … As Inter-Bank Rate Swells 292bps to 17.20%

Gains made during trading on Tuesday we’re enough to end the ‘free fall’ in the equities market index, appreciating by 0.92 per cent.
But analysts at Cordros Research said, with corporate earnings so unimpressive, on average, and coupled with investors concerns on the state of the economy, “we do not foresee improved trading activity in this market segment next week”.   
After appreciating by 0.92 per cent on Tuesday – the second single-day gain this month, the bears returned to the market wherein the benchmark index lost -0.78 per cent in three consecutive negative sessions.  
Subsequently, the Nigerian All Share Index (NSE ASI) gained 0.14 per cent week-on-week )w/w) to 31,091.69 points, while market capitalization lost N26.81 billion to close at N10.67 trillion. 
The appreciation led to a reduction in the Month-to-Date and Year-to-Date losses to 7.07 per cent and 10.29 per cent respectively. Demand for Oando and Mobil  led to a 1.55 per cent rise in the Oil/Gas index, the highest amongst all five NSE sector indices. The Consumer Goods and Industrial indices followed with respective gains of 0.42 per cent and 0.41 per cent w/w. However, the Insurance and Banking indices declined by 2.00 per cent and 1.65 per cent respectively.
Market breadth remained negative as 28 gainers and 44 losers were recorded. 1.73 billion shares worth N23.39 billion were traded in 15,044 deals this week, compared to 1.19 billion shares valued at N20.26 billion that exchanged hands in 14,349 deals the previous week. ZENITHBNK (729.10 million), Union Dicon Salt (70 million) and UBA (69.4 million) accounted for 51 per cent of the total volume traded this week, while Zenith Bank (N13.01 billion), Nestle (N1.71 billion) and GTBank (N1.32 billion) accounted for 69 per cent of the total value of transactions.
Average inter-bank rate expanded by 292 bps last week to 17.20 per cent. The increase seen in the market was as a result of cash withdrawal by state-owned energy company Nigerian National Petroleum Corporation (NNPC) and central bank’s cash reserves requirements (CRR) debit. Between Wednesday and Thursday, rates increased by a combine 564bps as liquidity waned in the banking system. The over-night rate rose by 975bps to 19.21%, while the 1, 3 and 6 month NIBOR rates surged by 77bps, 55bps and 62bps respectively.
At the treasury hills market, the bears dominated last week in line with  as average yield expanded 26bps to close at 14.04 per cent. Two bullish sessions were recorded on Tuesday and Friday wherein average yield contracted eight bps and four bps respectively. 
Other sessions witnessed major sell-offs following cash withdrawals from the system via the scheduled NTB auction. This week, investors continued to favour short-term bills as evidenced in the 65bps (8bps average) yield contraction witnessed on bills between the 13DTM and 83DTM. On the contrary, notes at the intermediate and long ends of the curve continued to witness major sell-offs, with yields between the 97DTM and 314DTM bills expanding a total of 233bps (10bps on average). At the NTB auction held on Wednesday, the apex bank sold N36.96billion of the 91-day bill at a marginal rate of 10%, N45.63billion of the 182-day bill (at 12.65%) and N65.82billion of the 364-day bill (at 13%).
At the foreign exchange market, the naira appreciated against one of the currencies within our coverage. It gained 1.41 per cent on the Pound to trade N306.69/£ w/w. 
However, it lost 0.77 per cent against the Euro and 0.14 per cent against the dollar w/w to trade at N218.33/€ and N198.55/$ respectively. Yesterday, the CBN adjusted its exchange rate peg to N197/$ from N196.95/$. The Naira also declined against the Dollar at the parallel to trade at N244/$.
The bond market closed last week on a positive note as yield contracted in each of the four sessions. Average yield contracted by 19 bps to close at 15.04 per cent following strong demands at the short and intermediate ends of the market. 
“As stated in our outlook the previous week, the gain is attributed to investors covering the gaps in their positions after the DMO sold below the amounts it offered at the last auction. 
“Bonds maturing between AUG 2017 and MAR 2024 recorded 38bps yield contraction (vs. 20bps expansion the previous week) while those falling through between NOV 028 and JUL 2030 posted 31bps average yield expansion (vs. 58bps contraction the previous week)”, said analysts at Cordros Research.

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