SM apital Research Nigeria Markets Daily Market Recap 6th ...

Daily Market Recap 6th March, 2018

|SCM Capital Research| Nigeria| Markets

Market Data Today’s Close % Change

NSE All Share Index 43,609.80 0.22%

Market Cap. (N'bn) 15,666.7 0.22%

Market Cap. ($'mn) 51,223.4 0.22%

Total Value Traded (N'mn) 5,963.6 3.80%

Total Value Traded ($'mn) 19.5 3.80%

Total Volume Traded (Mn Units) 445.5 76.75%

Total Number of Trades 5,078 18.92%

Market Breadth (A-D Ratio) 0.9x

Top 5 Gainers Close Price (N) % Change

UNILEVER 59.60 10.17%

CAVERTON 2.67 9.88%

JAPAULOIL 0.75 8.70%

AGLEVENT 0.61 7.02%

HMARKINS 0.33 6.45%

Top 5 Losers Close Price (N) % Change

REGALINS 0.40 -9.09%

MULTIVERSE 0.25 -7.41%

WEMABANK 0.95 -5.00%

UNIC 0.20 -4.76%

VITAFOAM 2.85 -4.68%

Equities Market

Equities extend gains...ASI adds another 0.22%

At the close of trading today, the domestic bourse extended gains as bargain hunting espe-

cially in the Oil and Gas index (+1.87%) buoyed the broader index due to the buying interest

in SEPLAT (+3.29%) coupled with rebound in the Consumer Goods index (+0.83%). Specifi-

cally, the All Share Index (ASI) rose by 22bps to settle at 43,609.80 points, while YTD return

increased to 14.0%. Expectedly, investors gained N34.4bn as market capitalization rose by

0.22% to close at N15.66tn. However, activity level also improved as value and volume

traded increased by 3.80% and 76.75% to settle at N5.96bn and 445.5mn units respectively.

In the interim, we expect a mixed market mood at tomorrow's session, while earnings

scorecard expectation still remains the dominant theme in shaping investors’ sentiment.

Money Market

At the money market, system liquidity was relatively tight today on the back of OMO auc-

tion which moderated liquidity by N67.77bn . As such, the Open Buy Back (OBB) and Over

Night (ON) rates rose by 100bps and 75bps respectively to close at 12.67% and 13.42%

respectively. Rates are expected to mirror the level of system liquidity tomorrow.

Treasury Bills & OMO Auction

Despite OMO auction which pressured the system liquidity, the T-bills market relayed a

bullish sentiment as average yields moderated marginally. Specifically, yield declined mar-

ginally by 2bps as average yield settled at 15.05%. Sentiment is expected to be influenced

by the depth of system liquidity tomorrow.

The CBN conducted OMO auction, sucking N67.77bn from the system through the 219-day

bills at stop rate of 14.40%, while there was no sale in the 114-day bills.

Bond Market

Converse to the T-bills market, the bond market relayed a bearish theme today as average

yield rose marginally by 4bps to settle at 13.66%. We expect sentiment to be mixed in the

bond market in the week ahead.

FX Market

Naira traded sideways in the FX market today. At the Official market, it appreciated margin-

ally by 2bps to close the day at N305.8/USD. At the I &E window, daily volume of $134.6mn

was traded as the domestic currency depreciated by 10bps to settle at N360.45/$. However,

it traded flat in the parallel market, closing at N361.0/$. The outlook for Naira is still stable

considering the level of Foreign Reserve and the current crude oil prices.

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100RSI of NSE All-Share Index

T-Bills Current % Change

3 m 14.88 -0.05

6 m 15.24 -0.01

12 m 15.02 -0.01

Bond Current % Change

3- year 13.82 +0.15

5-year 13.71 0.00

7-year 13.73 +0.02

10-year 13.36 0.00

Jun-15 Oct-16 Feb-18

|SCM Capital Research| Nigeria| Markets

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Global Wrap

Italy’s general election poses a new threat to the Eurozone as Trump`s trade 'war' gets

more lip service.

Italy’s general election over the weekend presented an outrageously strong result for the

populist, Eurosceptic parties, igniting concerns that the Eurozone’s third-largest economy

will be stuck with months of political instability. About half of the voters cast their ballot

in favour of anti-establishment parties 5 Star Movement and Lega, (formerly Lega Nord),

while the mainstream parties suffered a drop in support, neither managed to win an out-

right majority. That indicates a hung parliament and political gridlock that could leave Italy in

limbo for months, as parties squabble over possible coalitions. The inconclusive result

sent Italian stocks lower on Monday, with the FTSE MIB Index ending down by 1.3%. The

benchmark, however, rebounded today to trade at 1.1% higher. The big take away from the

elections has been the extent to which the Italians have fallen out of love with the EU, voting

in favour of far right and anti-establishment parties. Sweeping gains by anti-establishment,

Eurosceptic parties, such as the 5 Star Movement and the Lega Nord highlight the dissatis-

faction felt by Italians over high levels of immigration and unemployment in Europe’s third-

largest economy.

Meanwhile, The European Union has drawn up a list of U.S. goods it intends to target should

President Donald Trump go ahead with his proposed tariffs on imported metals. The tit-for-

tat levy, which would only target $3.5bn of U.S. goods, seems aimed at sending a political

message, with motorbike maker Harley-Davidson Inc. among the targets. Markets, hav-

ing sold off when the tariffs were proposed last week, continue their recovery as investors

increasingly dismiss the chances of tough discussion on imports actually turning into a trade

war.

Domestic Macro Wrap

Lower production cost amid justification for subsidy...

The Nigerian National Petroleum Corporation (NNPC) claimed to have reduced the cost of

producing crude oil to $20 per barrel, while aiming to reduce it further to $15 per barrel. In

the last OPEC meeting, Nigeria pledged to keep its oil production at 1.8 million barrels daily

after OPEC requested the country to join the cut efforts aimed at bringing down the global

oil glut. Yet independent local producers are eager to boost their production by 250,000

bpd by 2020, as part of the plan in the EGRP to bring Nigeria’s total to 2.5 million barrels

daily. At such low production costs, the urge to expand production makes perfect sense.

However, in August 2017, NNPC also claimed to reduce cost from $78 per barrel to $23 per

barrel. We however note that oil prices averaged $60 per barrel even at the peak of rising

prices. The concern this raises it that no entity can embark on production if it does not, at

worst, break-even. The quest by the independent marketers for a form of subsidy on the

product on the ground of high landing cost is another issue that is raising more questions

than answers. In our opinion, the lasting solution to efficient and effective pricing in the oil

and gas segment remains largely hinged on how fast the sector could be fully deregulated.

FX Current % Change

NIFEX NGN335.45/$ +0.08

NAFEX NGN360.07/$ +0.01

CBN Interbank Official NGN305.80/$ -0.02

I&E Window NGN360.45/$ +0.10

Parallel Market NGN361.0/$ 0.00

Crude Oil Current % Change

Brent Crude $65.51 -0.03%