Local Bourse Rebounds, as Investors Gained N375.5 Billion During The Week
Global market advance as investors watch earnings, data
This week, the bulls claim dominance, as eleven (11) out of the fourteen global market indices under our coverage advanced, and others declined. The positive performance could be attributed to important second-quarter earnings results and investors positioning themselves for other results coming out next week and the release of important economic data despite the resurgence in Covid-19 infection, brought on by the Delta variant.
Official figures for U.K Retail Sales showed a 0.5% jump in June after a surprise pullback in May. However, the figures were distorted by a rise in spending on food.
Also, Eurozone PMI readings on Friday showed that business activities are growing at the fastest pace in more than two decades, which could be buoyed by easing social restrictions and expanding vaccination programs.
Consequently, all the major U.S indices under our coverage closed high as upbeat earnings and signs of economic recovery fueled investors’ risk appetite. The DJIA Index closed above 35,000 for the first time ever to gain 1.08%w/w. Also, the Nasdaq Composite and S&P 500 Index advanced by 2.84%w/w, 1.96%w/w respectively to close the week.
Similarly, all major Europe indices under our coverage, the France CAC 40, German DAX, and UK FTSE 100 Index advanced by 1.68%w/w, 0.83%w/w, and 0.28%w/w respectively, as the European Central Bank maintained its persistent accommodative monetary policy stance until inflation reaches 2% well ahead of the end of its projection horizon.
Conversely, in Asia, the Japan Nikkie 225, Hong kong HANG SENG and India S&P BSE Index receded by 1.63%w/w, 2.44%w/w, and 0.31%w/w respectively, save for China Shanghai Composite Index that gained 0.31%w/w to close the week.
Also, all the major indices in the emerging markets, South Africa FTSE/JSE, Egypt EGX 30, and Argentina Merval Index expanded by 2.31%w/w, 0.81%w/w, and 2.77%w/w respectively, save for Brazil Bovespa Index that lost 0.42% w/w to close the week.
We expect mixed sentiment to prevail in the coming week as investors monitor the happenings from the Federal Reserve meeting. However, upbeat second-quarter earnings in mega-cap stocks could influence investor’s opinions.
Local Bourse Rebounds, as Investors Gained N375.5 Billion During The Week
The Nigerian Domestic Market ended w/w trading on a positive note, to reverse the two consecutive weeks of bearish sentiment, as the NGX-ASI appreciated by 1.90% from 37,947.18 points to close at 38,667.90 points. Positive market performance was recorded in all of the three trading sessions.
Investors gained about N376 billion, as the Market Cap. grew from N19.77 trillion in the previous week to N20.15 trillion.
At the end of the week, all major sectors gained, led by the Oil and Gas Sector with a percentage gain of +7.53%, followed by the Industrial Goods, Consumer, and Banking Sector, with percentages of +4.06%, +0.57%, and +0.44% respectively, save for the Insurance Sector that closed negative during the week with a loss of -0.74%.
CUTIX emerged as the best performing stock for the week with a w/w gain of +32.51%, while SMURFIT shed -38.46%.
A total of 896.17 million shares worth N5.24 billion in 11,714 deals were traded this week by investors on the floor of the Nigeria Stock Exchange, as against a total of 1.01 billion shares worth N10.92 billion in 17,297 deals last week.
In terms of corporate action, TOTAL NIG. PLC released its Q2 Financial statement this week. The positive performance was recorded, as Profit After Tax grew to N8.1bn(Y-O-Y), thereby prompting the management to recommend an interim dividend of N4.00, qualification date stands at 13th of August 2021, while payment will be made on the 13th of September 2021
Forty-three (43) equities appreciated at price during the week, higher than Twenty-nine (29) in the previous week. Sixteen (16) equities depreciated in price, lower than Twenty-two (22) equities in the previous week, while ninety-seven (97) equities remain unchanged, as against ninety-five (95) equities recorded in the previous week.
We expect profit-taking sentiment from recently appreciated stocks in the coming week. However, upbeat first-half earnings could sway investor’s sentiment.
Marginal gain of 0.04%, extends bullish sentiment to two consecutive weeks
Transactions on the NASD OTC Security Exchange Market closed on a positive note for the second consecutive week, as the NASD Security Index NSI rose marginally by 0.04%, representing 0.32 basis points to close at 754.43 points against 754.11 points in the previous week. Investors gained N280 million for the week, as the NASD OTC Market Capitalisation closed at N655.73 billion for the week.
Total trading activity for the week was valued at N180.72 million in 79 deals. The most traded stocks on the exchange for
the week are; SDNGXGROUP, SDCSCSPLC, SDFCWAMCO, SDNDEP, and SDMIXREAL.
SDCSCPLCPLC emerged as the top gainer for the week, with a maximum price appreciation of +1.56%, while SDNGXGROUP emerged as the top loser for the week with maximum price depreciation of -2.00%.
However, the market breadth negatively, recording 2 losers and 1 gainer.
We expect the NASD OTC Market to trade in a tight range in the coming week.
Activities on Treasury Bills this week were limited to the secondary market as no new instruments were offered and traded on a quiet note due to the activities on the secondary bond market.
System liquidity indicators closed higher, as Overnight (O/N) and Open Buy Back (OBB) rose to 28.75% and 27.50% respectively, from 4.75% and 4.50% in the previous week.
We witnessed bearish sentiment on the short and mid-end of the curve, particularly on the NTB 28-Aug-2021, NTB 16-Sep-21, and NTB 27-Jan-22, as yields gained 61bps, 20bps, and 160bps w/w respectively to close at 4.9%, 5.18%, and 6.83%.
Consequently, the average yield of the Treasury Bills expanded by 21bps to 6.9%, as against 6.89% recorded last week.
Conversely, the average yield on the secondary Open Market Operation (OMO) closed lower to settle at 8.58%, representing a 72bps decrease against last week.
In the coming week, we expect the money market to trade in a tight range as investors focus on developments in the NTB auction where the apex bank is scheduled to roll over N216.19bn worth of bills. Looking at the trend from the previous NTB auctions, we expect the stop rate for the shorter tenors to remain the same, while the stop rate for the longer end of the curve recedes further due to huge buy-interest.
This week, the Debt Management Office (DMO) on behalf of the Federal Government of Nigeria (FGN) held an FGN Bond auction by offering N150bn across 2028, 2036, and 2050 maturities.
At the FGN Bond Auction, the DMO offers of N50bn(2028), N50bn(2036), and N50bn(2050), was met with a subscription of N56.41bn, N73.44bn, and N156.26bn respectively, out of which the DMO allotted N31.71bn(2028), N51.16bn(2036), and N55.20bn(2050) bringing the total amount allotted to N138.07bn. The DMO also sold N103.90bn of the 13.98% of the FGN FEB 2028 security on a Non-Competitive basis. As expected, investors’ appetite was titled towards the longer end of the curve, as the bid-to-offer ratio for the 2050-maturity was 3.13x, while the 2028 and 2036 paper posted a bid-to-offer ratio of 1.13x and 1.47x respectively.
Marginal rates for the 2028 and 2036 papers were allocated at 12.35% and 13.15% respectively. However, the rate on the 2050 paper was allocated at 13.25%, 45bps lower than the marginal rate at the previous bond auction.
Also, the DMO released the July Nigeria Savings Bond Allotment Result for the 8.35% FGNSB JUL 2023 and 9.35% FGNSB JUL 2024 maturities, of
which N341.01m and N620.99m were sold respectively, bring the total amount of sales to N962m.
Over the three trading days, we noticed a divergent trend across the end of the curve as market players adjusted their portfolios in line with their appetites.
In the short end of the curve, we noticed sell pressure on the FGNSB 15-AUG-2021 and FGNSB 15-JAN-2022, as yields rose by 22bps and 12bps w/w respectively to settle at 4.84% and 5.43%.
However, the middle and long end of the curve witnessed buy interest, as yields on the FGNSB 23-JUL-2030 (middle) and FGNSB 27-MAR-2050 compressed by 9bps and 10bps w/w respectively to close at 12.56% and 13.15%.
Consequently, the average yield on the secondary bond market reduced by 7bps to close at 9.62%, which indicates the spillover demand from the just concluded bond auction.
We expect investors in the bond market to trade in a tight range, as investors monitor yield movement.
Foreign Exchange Market
At the I&E FX window, the Naira depreciated by 1.12%(w/w) to close on Friday (23/07/2021) at ₦411.50/USD against ₦410.38/USD from last Friday’s position. However, at the BDC, the Naira remained unchanged at ₦500.00 this Friday (23/07/2021).
The Foreign Reserve grew $132.94 million to the level of $33.25 billion (23/07/2021) from $33.12 billion (16/07/2021).
The Brent Crude price appreciated by $0.51/barrel (w/w) to $74.10/barrel this Friday
(19/07/2021) as against $73.59/barrel last Friday (16/07/2021), representing a gain of 0.69% (w/w). Bonny Light also increased by $4.37 to $72.80/barrel on Friday(23/07/2021) from $68.43/barrel (19/07/2021)
Source: GTI Research