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Bears continue to dominate equities market as Naira remains flat to Dollar

Activities at the Nigerian Stock Exchange (NSE) on Tuesday showed that the bears continued to dominate the equities market, with the ASI shedding 0.87% to 43,877.30 points, as profit taking persisted across most sectors.

However, on the currency exchange market, the naira remained flat against the dollar at NGN363 in the parallel market, while it weakened by NGN0.02% to NGN360.31 in the I&E FX window. Total volume of trades in the I&E FX window dropped by 33.57% to USD167.25 million. Meanwhile, yesterday, the apex bank injected USD210 million into the FX market, comprising USD100 million, USD55 million, and USD55 million disbursements to the wholesale, SMEs, and invisibles windows, respectively.

Still on equities, the Month-to-Date and Year-to-Date returns moderated to -1.05% and 14.73% respectively.

Among sectors, the Banking (-2.11%) index recorded the largest loss, followed by the Industrial Goods (-0.98%), Insurance (-0.52%), Oil & Gas (-0.42%), and Consumer Goods (-0.28%) indices, as investors took profit in FBNH (-5.15%), CCNN (-3.85%), MOBIL (-2.78%), WAPIC (-4.05%), and FLOURMILL (-4.71%) shares respectively.

Market breadth remained negative, with 47 losers and 18 gainers, led by HMARKINS (-9.09%) and PRESTIGE (+7.69%) respectively. Total volume traded rose by 68% to 717.15 million units, valued at NGN4.91 billion (+77.48%), and exchanged in 6,720 deals.

Our outlook for the equities market remains positive, amidst strengthening macroeconomic fundamentals; more so, as investors take position ahead of Q4-17 corporate releases.

In Fixed Income and Money Market, the Exchange saw the overnight lending rate recorded its largest expansion so far this year, surging by 1,808 bps to 37.42%, following outflow via OMO sales valued at NGN20.95 billion and contraction in system liquidity to NGN93.29 billion deficit, from a surplus of NGN176.76 billion yesterday.

Accordingly, average yield rose by 28 bps to 14.06% in the NTB market, following squeeze in liquidity position. Yields inched higher across all ends of the curve – short (+52 bps), mid (+13 bps), and long (+16 bps) – driven by selloffs of the 30DTM (+129 bps), 107DTM (+43 bps), and 205DTM (+53 bps) bills respectively.

Similarly, broad selloffs ensued in the bond market, as average yield rose by 24 bps to 13.68%. Yields were higher at the short (+31 bps), mid (+33 bps), and long (+21 bps) ends of the curve, owing to selloffs in the JUN-2019 (+31 bps), JUL-2021 (+39 bps), and MAR-2024 (+40 bps) bonds respectively.