Capital Market: What to expect in May-2020

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The performance of the Nigerian equities market in April-2020 was broadly positive, as investors took advantage of the cheap valuation to average down their overall portfolio cost.

Thus, the NSE-ASI gained 8.1% m/m to close at 23,021.01 points and the YTD return improved to -14.2% (March-2020: -20.6%).

Similarly, fixed income market sentiment was bullish, thanks to the buoyant level of liquidity in the financial system during the month.

Capital Market: What to expect in May-2020

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Notably, average NTB and OMO yields fell by 98bps and 5.2% m/m to 2.7% and 9.9% respectively. Also, average FGN Bond yields decline by 1.7% m/m to settle at 10.2%.

Looking ahead, we expect developments in the crude oil market and decisions to ease lockdown and the resulting economic impact to drive sentiments in the capital market.

Specifically, with corporate earnings season extended to May, we expect companies’ earnings fundamentals and dividend declaration to continue to support the ongoing positive outlook in the market.

However, since many high cap stocks have this month as their dividend qualification dates and markdowns, we expect a bit more volatilities in the equities market this month.

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At the Fixed Income market, the Senate’s approval for the FG to raise N850.0bn from domestic sources, which was initially approved as external borrowing, may support a slight uptick in the yield environment.

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This is as the domestic demand continues to show the capacity to meet the supply, amid the CBN‘s expansionary monetary policy stance (net-inflow of OMO maturities).

United Capital Research

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