Despite a 207bps d/d moderation and two negative closes in the shortened week, the pre-Christmas rally held as the ASI closed out the week 86bps in the green. The biggest loser on Friday was the Oil & Gas sector (-463bps d/d, +208bps w/w), driven by sell-offs in SEPLAT (-748bps d/d, +137bps w/w), FO (-728bps d/d, +11.95% w/w), ETERNA (-600bps d/d, +217bps w/w) and OANDO (-101bps d/d, +316bps w/w).
However, the sector was still the largest gainer of the week thanks to a rally earlier in the week. Likewise, the Consumer Goods (-358bps d/d, +175bps w/w) and Banking (-62bps d/d, +98bps w/w) sectors ended the week higher despite Friday’s losses, as NESTLE (-848bps d/d, +67bps w/w), NB (-61bps d/d, +250bps w/w), ZENITHBANK (-129bps d/d, +132bps w/w) and GUARANTY (-29bps d/d, +148bps w/w) all lost on the day but gained for the week. Finally, the Industrial Goods sector (-147bps d/d, -99bps w/w) was the only loser w/w as DANGCEM (-219bps w/w) and WAPCO (-79bps w/w) dragged the sector lower.
With investors likely to continue to take positions on the final trading day of the year, we expect a positive session to close out the year and anticipate heightened activity levels.
PZ released its H1’18/19 results today, reporting a 15% y/y decline in revenue to ₦35 billion, and a 107% y/y increase in PAT to ₦1.2 billion. The stock gained 409bps in Friday’s session to settle at ₦11.45 and is down 44% in 2018.
Sentiment remains bullish despite tight system liquidity
Despite consistent OMO mop-ups, the interbank call rate declined 450bps w/w to settle at 17.17% on Friday. Overall, the CBN sold ₦420 billion in OMO auctions this week, also selling ₦646 billion at a special OMO on Thursday.
In the secondary market, buying was observed in the T-Bills space, with yields declining 1bp d/d and 13bps w/w despite tightened liquidity. Specifically, yields on the 286DTM and 335DTM bills declined 82bps w/w and 35bps w/w to settle at 16.36% and 16.59% respectively. Likewise, buying was also observed in the bond space, with benchmark yields declining 9bps d/d and 21bps w/w, with demand tilted towards the long-dated bonds. Notably, yields on the 13.98% FGN FEB 2028, 10.00% FGN JUL 2030 and 12.40% FGN MAR 2036 bonds declined 35bps, 35bps and 37bps w/w to settle at 15.29%, 15.27% and 15.24% respectively.
We expect further interventions from the CBN next week to maintain tightened liquidity. However, we anticipate some buying in the market on the last day of the year.
On Thursday, the CBN injected $210 million into the various foreign exchange windows. Amid this, the Naira appreciated ₦0.19 w/w at the I&E FX Window to settle at ₦364.35 against the dollar and appreciated ₦1.50 against the dollar to settle at ₦362.00 w/w in the parallel market.
We expect the naira to remain relatively stable across the various windows of the currency space as the CBN maintains interventions in the FX market.