Investors in the equities market recorded a gain of N2.01 trillion as trading closed on a positive sentiment in the week ended February 16, 2024.
A total turnover of 1.559 billion shares worth N36.497 billion in 42,546 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 2.478 billion shares valued at N47.856 billion that exchanged hands last week in 54,982 deals.
The Financial Services Industry (measured by volume) led the activity chart with 1.127 billion shares valued at N18.908 billion traded in 19,424 deals; thus contributing 72.27 percent and 51.81 percent to the total equity turnover volume and value respectively.
The Conglomerates Industry followed with 117.400 million shares worth N1.508 billion in 2,775 deals. The third place was Consumer Goods, with a turnover of 98.422 million shares worth N4.008 billion in 6,322 deals.
The local equities market ended the week on a positive note after the NGXASI recorded a day-on-day increase of 156 bps and a week-on-week increase of 379 bps, settling at 105,722.78 points.
This positive sentiment, which was propelled by improved buying interest seen on select stock giants like GEREGU, BUAFOODS, and AIRTELAFRI, amongst others, reflects a year-to-date growth of 41.39 percent.
Assessing the overall weekly performance, while market breadth ended at 0.69x, indicating that 51 decliners outpaced the 35 advancers, market capitalization increased by N2.01 trillion, closing the week at N57.85 trillion.
The trading metrics for the week revealed that total trading volume rose by 6.41 percent week on week, reaching 342.52 million units, while the total traded value increased by 9.46 percent WoW, totaling N8.05 billion. FBNH, GTCO, and UBA led the volumes board with total closing values of 1.48 billion units, 1.18 billion units, and 1.01 billion units, respectively. While GEREGU, GTCO, and UBA topped the values chart with total closing values of N2.09 billion, N3.88 billion, and N2.40 billion, respectively.
Trading in the top three equities namely United Bank for Africa Plc, FBN Holdings Plc and Guaranty Trust Holding Company Plc(measured by volume) accounted for 389.286 million shares worth N11.757 billion in 5,372 deals, contributing 24.96 percent and 32.21 percent to the total equity turnover volume and value respectively.
At the money market, the overnight (OVN) rate contracted by 7bps w/w to 16.9 percent, as the financial system remained buoyant from last week, further supported by inflows from OMO maturities (N40.00 billion) amid debits for CRR maintenance (32.5% of w/w increase of DMB deposits).
Accordingly, the average system liquidity this week settled higher at a net long position of N302.20 billion (prior week: net long position of N242.23 billion).
Financial experts at Cordros Research envisage an upward shift in the OVN rate this week. They also believe the debits for this week’s FGN bonds auction (N2.50 trillion) and possible net NTB issuances will squeeze out all the liquidity in the system amid inflows from FGN Bond coupon payments (N112.67 billion).
Meanwhile, activities in the Treasury bills secondary market closed on a negative note in the review week as the average yield across all instruments expanded by 9bps to 16.0 percent.
“Nonetheless, we note that sentiments were bullish for most of the week as market players cherry-picked instruments with attractive yields across the spectrum. Across the market segments, the average yield advanced by 12bps to 15.5% in the T-bills segment but declined by 10bps to 17.8% in the OMO secondary market,’’ Cordros analysts said.
This week, they envisage reduced bill demand in the secondary market following their expectations of tight liquidity conditions. ‘’Thus, we believe yields in the secondary market will likely head northwards. Additionally, the CBN is scheduled to conduct an NTB PMA on Wednesday (21 February), with N265.50 billion worth of maturities available on offer.’’
Bearish sentiments persisted in the Treasury bonds secondary market as the average yield increased by 63bps w/w to 16.1 percent. ‘’We attribute this week’s performance to (1) investors exiting positions ahead of the February 2024 bonds auction and (2) the underwhelming CPI data (January 2023 Inflation: +29.90% y/y) released by the NBS on Thursday. Across the benchmark curve, the average yield expanded at the short (+86bps), mid (+69bps) and long (+66bps) segments, following sell-offs of the JAN-2026 (+257bps), JUN-2033 (+125bps) and APR-2049 (+187bps) bonds, respectively,’’ analysts said.
However, Nigeria’s FX reserves recorded gains this week, as the gross reserves level increased by $ 96.05 million w/w to $ 33.21 billion (14 February).
Meanwhile, the naira depreciated by 4.4 percent to N1,537.96/USD at the Nigerian Autonomous Foreign Exchange Market (NAFEM), as the CBN sold c.USD170.00 million to banks during the week. At the NAFEM, total turnover (as of 15 February 2024) declined by 60.2% WTD to USD968.86 million, with trades consummated within the NGN922.38 – NGN1, 607.00/USD limit. In the Forwards market, the naira depreciated across the 1-month (-2.5% to NGN1, 505.23/USD), 3-month (-2.7% to NGN1, 542.87/USD), 6-month (-3.2% to NGN1, 595.69/USD), and 1-year (-3.4% to NGN1, 702.07/USD) contracts.
Notwithstanding the recent policy actions by the CBN, the currency has remained under pressure given that the market supply remains frail.
