As Naira appreciates 1.7% in official market
BY BAMIDELE FAMOOFO
The NGX last week reversed its bullish run in the preceding week to close with a 0.45 percent week-on-week decline in the benchmark index and market capitalization despite the increased profit-taking activities by investors.
Notably, the market witnessed pressured selloffs in NAHCO (-34%), CAVERTON (-17%) HONYFLOUR (-15%), FTNCOCOA (-14%) and NB (-11%) in that order, prompting a N126.83 billion loss for investors.
Consequently, there was a recorded dip in the All-Share Index and Market Capitalization by 0.45 percent w/w to close at 51,979.92 points and N28.03 trillion respectively.
The year-to-date return moderated marginally to 21.7 percent. Furthermore, the performance of the sectorial gauges tracked traded in the mix except for the NGX Oil and Gas and NGX Insurance Index which gained 3.80 percent and 1.81 percent week on week.
On the flip side, there were declines in the NGX Banking (4.06%), trailed by the NGX Consumer Goods Index and NGX Industrial Index which recorded losses by 1.97 percent and 0.49 percent respectively on a w/w comparison. Elsewhere, the bullish sentiments pervaded the level of trading activity during the week as total traded volume and value increased by 81.87 percent and 96.93 percent w/w to 917.2 million units valued at N14.80 billion.
Meanwhile, deals for the week under review closed at 19, 513 from 12,393 in the prior week. In the new week, we expect the market to trade in a mixed sentiment as the dividend season draws near for investors to continue their profit-making activities. Experts continue to advise investors to trade on companies’ stocks with sound fundamentals and a positive outlook.
In the foreign exchange market, the Naira appreciated by N7.33 (1.70%) w/w against the dollar from last week’s price of N430.33/USD to close the week at N423/USD at the I&E FX Window due to eased pressure on the dollar.
However, there was negative reaction to the comments of the CBN Governor during the week which prompted a 6.62 percent (N41.00) w/w depreciation of the Naira against the greenback at the Parallel market to close at N660/USD from N619/USD in the prior week.
At the Interbank Foreign Exchange market, NGN/USD closed flat at N430.00/USD amid CBN’s weekly injections of USD210 million: USD100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), USD55 million was allocated to Small and Medium Scale Enterprises and USD55 million was sold for Invisibles.
The Naira/USD exchange rate closed in the mixed bag last week for all the foreign exchange forward contracts. Specifically, one month and 3 months contracts gained 0.01 percent and 0.08 percent respectively to close at N427.40 and N435.50 while the two months, 6 months and 12 months contracts dipped by 0.12 percent, 0.32 percent and 0.23 percent week on week in that order to close at N431.62/USD, N448.09/USD, and N471.71/USD in that order.
Elsewhere, the Bonny light price climbed higher by $4.27 to close the week at USD120.36 from USD116.09 per barrel in the previous week.
In the new week, we expect the local currency to trade relatively calm against the greenback barring market distortions while the CBN continues its weekly FX market interventions.
In the just concluded week, treasury bills worth N10 billion matured via the Open Market Operation (OMO) amid the absence of refinancing from the Apex bank.
The financial system liquidity ease appears to have been induced by the rise in lending facility received by deposit money banks from the apex bank to shore up their short-term liquidity needs – given the pressure from Bond issuances. Banks went for Repo transactions (N287.51 billion) to shore up financial liquidity even as they also queued to borrow from CBN (standing lending facility – N13.93 billion) more than they deposited (standing deposit facility- N779.6 million).
Given the liquidity from borrowings and Repo, NIBOR for most tenor buckets crashed: 1 month, 3 months and 6 months fell to 10.81% (from 12.72%), 11.82 percent (from 11.90%) and 11.11 percent (from 11.16%) respectively. However, the overnight rate rose to 14.73 percent (from 14.07%) – an indication of worsening liquidity in the banking institutions.
The Treasury Bills primary market was quiet as there were no T-bills offers from the apex bank. Despite the zero maturities, we saw NITTY rise for all maturities tracked. Specifically, NITTY rose for 1 month, 3 months, 6 months and 12months maturities to 9.69 percent (from 9.37%), 10.02 percent (from 8.66%), 10.50 percent (from 8.06%) and 9.90 percent (from 6.85%) respectively.
