BY BAMIDELE FAMOOFO
A total turnover of 1.247 billion shares worth N22.372 billion in 23,406 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 1.137 billion shares valued at N10.812 billion that exchanged hands the preceding week in 23,471 deals.
The market opened for four trading days last week as the Federal Government of Nigeria declared Friday, April 15, 2022 (Good Friday) and Monday, April 18, 2022 (Easter Monday) public holidays to commemorate the 2022 Easter celebrations.
The Financial Services Industry (measured by volume) led the activity chart with 975.776 million shares valued at N10.678 billion traded in 13,097 deals; thus contributing 78.24% and 47.73% to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 65.187 million shares worth N1.752 billion in 2,725 deals.
The third place was The Services Industry, with a turnover of 42.614 million shares worth 135.745 million in 1,172 deals. Trading in the top three equities namely Guaranty Trust Holding Company Plc, Zenith Bank Plc and Fidelity Bank Plc (measured by volume) accounted for 429.657 million shares worth N7.786 billion in 5,871 deals, contributing 34.45% and 34.80% to the total equity turnover volume and value respectively.
According to Stock market experts, local stocks staged an impressive comeback from preceding week’s rout as investors reacted positively to MTNN’s PSB license approval amid bargain hunting across tickers with attractive entry points.
The All-Share Index rose by 1.9% w/w, to 47,510.38 points. Notably, bargain hunting in NB (+11.8%), ZENITHBANK (+8.7%), GTCO (+6.5%), OKOMUOIL (+5.6%), MTNN (+3.4%) and DANGCEM (+2.4%) spurred the weekly gain.
Consequently, the MTD and YTD return increased to +1.2% and 11.2%, respectively. Activity levels were upbeat, as trading volume and value rose by 10.9% and 109.2% w/w, respectively.
In the near term, it is expected that the bulls will retain dominance given the positioning for the Q1-22 earnings announcements, even as institutional investors continue to search for clues on the direction of yields in the fixed income market. However, experts at Cordros Securities advised investors to take positions in only fundamentally justified stocks as the weak macro environment remains a significant headwind for corporate earnings.
In the money market, the overnight (OVN) rate expanded by 492bps w/w to 11.2%, as outflows for net NTB issuances (N17.78 billion) pressured the system amid the week’s sole inflow from OMO maturities (N48.47 billion).
Experts expect system liquidity to be pressured in the coming week.
“We believe the anticipated inflows from OMO maturities (NGN23.95 billion) will most likely be outweighed by the weekly auctions (OMO & FX) and possible CRR debits. Thus, we expect the OVN rate to trend northwards.”
The Treasury bills secondary market remained bearish, with market participants readying bids for this week’s NTB PMA in anticipation of an increase in NTB stop rates.
Consequently, the average yield across all instruments inched higher by 2bps to 3.4%.
Across the market segments, the average yield expanded by 11bps to 3.7% in the OMO segment but was flat at 3.3% in the NTB segment. At this week’s NTB PMA, the CBN offered N141.26 billion – N2.19 billion of the 91-day, N6.95 billion of the 182-day, and NGN132.12 billion of the 364-day – in bills. Ultimately, the CBN allotted NGN159.03 billion – N4.51 billion of the 91-day, N10.56 billion of the 182-day and N143.97 billion of the 364-day bills – at respective stop rates of 1.74% (previously: 1.75%), 3.00% (unchanged), and 4.60% (previously: 4.45%).
With system liquidity expected to be tight in the coming week, Stock Analysts anticipate a further increase in the average yields on T-bills from current levels.
Like the prior week, bearish sentiments dominated the treasury bonds secondary market, as demand for FGN bonds remained tepid amid continued profit-taking activities on selected instruments. Thus, the average yield expanded by 7bps w/w to 11.1%. “Specifically, we witnessed profit-taking across the short (+21bps) and long (+3bps) ends of the benchmark curve, following sell-offs of the JAN-2026 (+55bps) and MAR-2035 (+17bps) bonds, respectively. Meanwhile, the average yield was flat at the mid segment,” experts noted.
“We maintain our view of an uptick in bond yields in the medium term, especially as we start a liquidity-stiffened Q2-22, with the FGN’s borrowing plan (NGN675 billion) for Q2-2022 pointing towards an elevated supply,” Cordros Securities noted.
Nigeria’s FX reserves increased by $53.48 million w/w to USD39.71 billion (12th April 2022). Meanwhile, the naira depreciated both at the I&E window (IEW) and parallel market by 0.2% to N417.50/USD and 0.5% to N590.00/USD, respectively.
At the IEW, total turnover (as of 13th April 2022) declined by 14.7% WTD to USD498.85 million, with trades consummated within the N410.00 – N453.15/USD band. In the Forwards market, the naira was flat at the 1-month (N418.12/USD) and 6-months (N432.47/USD) contracts but appreciated at the 3-months (+0.1% to N423.78/USD) and 1-year (+0.2% to N448.01/USD) contracts.
