Local Bourse Extends Bullish Sentiment To The Seventh Consecutive Week

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GLOBAL MARKET

Global Market Mixed on Monetary Policy Maker Meetings, Earnings Result

Last week, bullish sentiments dominated nine (9) out of the fourteen global market indices under our coverage, while five (5)GLOBAL MARKET 30102021 indices depreciated. This performance was a result of investors continuing to keep themselves abreast of the quarterly corporate earnings result, surging energy prices, inflation, important economic indicators, important policymakers meeting, and rising expectations that the Federal Reserve will announce a tapering of stimulus next month.

U.S economy grew a disappointing 2.0% for the third quarter, 2021, impacted by the delta variant cases, supply chain problems, increasing inflation, and slow down in consumer spendings.

Eurozone economy (consisting of nineteen countries) recorded a better than expected growth of 2.2% for the third quarter, as inflation hit hard to a new 13-years record in October 2021 fueled by supply chain disruption and energy crises. The headline inflation rose to 4.1% more than double the European Central Bank (ECB) target. Also, the European Central Bank (ECB) kept its stimulus programmes and interest rate unchanged despite inflationary pressure.

In Asia, the Bank of Japan (BOJ) kept its short-term interest rate unchanged at -0.10%,  and also cut its real GDP growth outlook (till March 2022) from 4.8% to 4.3% and consumer inflation forecasts for fiscal 2021. Retail Sales in Japan fell 0.6% in September from a year earlier.

Consequently, all the major U.S indices under our coverage, DJIA Index, Nasdaq Composite Index, and S&P 500 Index increased by 0.40%w/w, 1.33%w/w, and 2.71%w/w respectively, amid better than expected corporate earnings from Microsoft, ExxonMobil, and Alphabet despite the downbeat from Apple and |Amazon earnings impeded by the supply-chain disruption

However, major indices under our coverage in Europe; the UK FTSE 100, France CAC 40, and the German DAX Index appreciated by 0.46%w/w,  1.44%w/w, and 0.94%w/w respectively.

Similarly, the major indices under our coverage in Asia, the Hong kong HANG SENG, China Shanghai Composite, and India S&P BSE Index declined by 2.87%w/w, and 0.98%w/w and 2.49%w/w respectively while Japan Nikkie 225 increased by 0.30%w/w, as more Chinese property development companies continued to default on their bond payments.

Furthermore, the major indices in the emerging markets under our coverage, South Africa FTSE/JSE, and EGX 30 increased by 0.62%w/w, and 3.36%w/w except for Argentina Merval Index and Brazil Bovespa Index that decreased by 3.84%w/w and 2.63%w/w.

Outlook

In the coming week, we expect mixed sentiment, as investors await the result from the Fed Reserves FOMC meeting. Also, we believe that upbeat earning expectations may drive volatile trading.

EQUITY MARKET

NGX

Equity Extends Bullish Run by 0.66%w/w, as Market Capitalisation Nears N22 Trillion GAINER 30102021

Trading activities on the Nigerian equity market ended w/w on a green note to extend the positive performance to the seventh consecutive week. Bullish market performances were recorded in four of the five trading sessions. This performance was driven by investors’ buy sentiments in bellwethers. As a result, the NGX-ASI and Market capitalization appreciated by 0.66% from 41,763.26 points and N21.794 trillion to close at  42,038.60 points and N21.938 trillion respectively Consequently, the year to date (YTD) increased to +4.39%, and investors gained N144 billion w/w.

At the end of the week, all the major indices under our coverage showed positive performances. Insurance Index emerged as the highest gainer with (+5.28%),  followed by the Oil & Gas Index (+4.04%), Banking Index  (+2.43%), Consumer Goods (+1.52%), and Industrial Goods Index (+0.49%).

UPL emerged as the best performing stock for the week with a w/w gain of +44.67%, while GLAXOSMITH emerged as the worst-performing stock with a w/w loss of -12.86%.

A total of 3.001 billion shares worth N34.547 billion in 25,932 deals were traded this week by investors, as against a total ofLOSERS 30102021 1.565 billion shares worth N18.384 billion in 21,621 deals

Forty-seven (47) equities appreciated at price during the week, higher than Thirty-four (34) equities in the previous week. Twenty-five (25) equities depreciated in price, lower than Thirty-six (36) equities in the previous week, while eighty-four (84) equities remained unchanged, as against eighty-six (86) equities recorded in the previous week.

Outlook

We expect positive sentiment this week, with bargain hunters taking positions on stocks with good prices, as the 9M earnings report rolls out. Furthermore, investors will also track yield movement in the fixed income market.

NASD OTC

NASD Market Ends Bullish Sentiment Of Three Consecutive Weeks, As NSI Sheds 0.09%

OTC

Transactions on the NASD OTC Security Exchange Market closed on a negative note to halt the bullish sentiment of three consecutive weeks, as the NASD Security Index NSI dipped by 0.09%, representing 0.73 basis points to close at 746.86 points against 747.53 points in the previous week. Investors lost N550 million for the week, as the NASD OTC Market Capitalisation closed at N617.04 billion for the week.

Total trading activity for the week was valued at N121.13 million in  65 deals, against N39 billion in  43 deals recorded in the previous week. The most traded stocks on the exchange for the week are; SDAFRILAND, SDCSCSPLC, SDFCWAMCO, SDNDEP, SDNASDPLC, and SDNIPCOPLC.

SDNASDPLC emerged top gainer for the week, with a maximum price appreciation of (+39.93% to N19.17)while SDNDEP emerged as the top loser for the week with a price depreciation of (-9.06% to N227).

This week’s price depreciation resulted from investors’ sell-sentiment in medium and large capitalized stocks among which are; SDNDEP (-9.06% to N227), SDCSCSPLC (-4.07% to N17.22), SDFOODCPT (-1.10% to N0.9), and SDAFRILAND (-2.63% to N1.11).

OTCPriceResultantly, the market breadth closed negatively, recording 3 losers and 2 gainers.

Outlook

In the coming week, we expect mixed sentiment in the NASD OTC market, as investors cherry-pick volatile and attractive stocks.   

Treasury Bills

NTB Auction: Stop Rate on the 364-day T-bills declined by 26bps to 6.99% 

tb 1

This week, the CBN held a Nigeria Treasury Bill (NTB) auction by offering N150.04bn across all tenors, to roll over matured bills. This could be driven by the need to mop up excess liquidity in the market.

At the Primary Market Auction (PMA), the CBN offered a total of N150.04bn across the 91-days, 182-days, and 364-days tenor, but the total amount sold settled at N235.04bn as subscription rate on the 91-days and 182-days printed at 1.26x and 0.55x respectively, while the 364-days was over-subscribed by 3.01x.

Stop rates for the 91-days, 182-days, and 364-days remained the same at 2.50%, 3.50%, while the stop rate declined by 26bps from 7.25% to 6.99%.

Consequently, system liquidity indicators closed lower, as Overnight (O/N) and Open Buy Back (OBB) settled to 18.50% and 18.00% respectively, from 19.25% and 19.00% in the previous week

Trading activities for the week on the secondary treasury bills market closed relatively on a quiet note, as investors focused majorly on the primary auction. Activities were seen majorly on the short to mid tenor bills.

OMO 3

Furthermore, the average yield of the Treasury Bills closed on a bearish sentiment to 5.59%, as against 5.38% recorded last week, representing a 21bps increase.

The OMO Bills market traded on a calm note as interest was observed majorly on the mid to long tenor bills

However, the average yield on the secondary Open Market Operation (OMO) closed  bullish to 6.37% from 6.44%, representing a 7bps decrease

In the coming week, we expect a relatively quiet trade and bullish sentiment in the secondary treasury bills due to the excess liquidity in the market.

.We also expect the system liquidity to close lower due to the FGN November Savings Bond auction.

Bond Market

Bond

Marginal Bullish Performance On The Secondary Bond Market

This week’s activities on the Bond market were limited to the secondary market, as investors position themselves for next week’s Sovereign bond auction. Trading activities were relatively active, as interest was observed across all tenors.

The average yield on the bond traded on the FMDQ market closed at 8.32% from 8.40%, representing an 8bps decrease.

Outlook

In the coming week, we expect the secondary bond market to trade on a relatively quiet note, as investors table in their bids for the October FGN Savings Bond offer (from Monday (01/11/2021) to Friday (05/11/2021).

Money Market

MONEY RATE 30102021System liquidity indicators closed lower, as Overnight (O/N) and Open Buy Back (OBB) decreased to 18.50% and 18.00% from 19.25% and 19.00% respectively in the previous week.

FOREIGN EXCHANGE 30102021Foreign Exchange Market

At the I&E FX window, the Naira depreciated by 0.01% to close on Friday (29/10/2021) at ₦415.10/USD against ₦415.07/USD last Friday’s position.

FOREIGN RESERVE 30102021Foreign Reserve

The Foreign Reserve grew by $871.47 million to the level of $41.83 billion (28/10/2021) from $40.96 billion (21/10/2021)

CRUDE OIL 30102021Crude Oil

The Brent Crude and WTI Crude depreciated by $1.81/barrel (w/w) and $0.19/barrel (w/w) to $83.72/barrel and $83.57/barrel this Friday(29/10/2021) as against $85.53/barrel and $83.76/barrel last Friday(22/10/2021), representing a decrease of 2.12% (w/w) and 0.23% (w/w). Similarly, Nigeria’s Bonny Light also decreased by $0.87to $83.50/barrel on Friday(29/10/2021) from $84.37/barrel (22/10/2021), representing a decrease of 1.03% (w/w)

 

Source: GTI Research

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