Investors Await N212.85bn T-bill Auction This Week

Investors in the country’s capital market are optimistic that the next Treasury bill auction slated for this week will boost activities in the fixed income market.

Expectedly, there were no significant movements in liquidity level last week, given the absence of auctions. However, the Open Buy Back and overnight rates declined by 4.83 per cent and 6.66 per cent respectively, to peg average money market rate at 18.55 per cent at the close of the week.

Activities in the Nigerian bond market seemed bearish, as indicated by a 0.04 per cent week-on-week change in average bond yield to 16.14 per cent.  Conversely, average yields declined in the T-bills space across all tenors to peg at 17.16 per cent as of Thursday, August 26, 2016.

However, there were mixed reactions in the equities market last week, as the Nigerian Stock Exchange All-Share Index appreciated on three out of five trading days. Consequently, the index pared by 0.72 per cent week-on-week to peg the year-to-date return at -4.16 per cent.

The index gained 1.41 per cent week-on-week, as volume of transactions contracted by 18.71 per cent week-on-week while value of transactions appreciated by 6.76 per cent from the prior week.

The analysts attributed the poor performance of the equities market to profit taking activities on large capitalised stocks, as well as sell-offs of some banking stocks, following the Central Bank of Nigeria’s ban on nine banks from trading in the foreign exchange market on August 23, 2016.

There were 29 gainers and 25 decliners last week. Newgold Exchange Traded Funds led the gainers chart again last week, after gaining 15.56 per cent week-on-week to close at N4,850.  Seplat Petroleum Development Company Limited, Forte Oil Plc, Transnational Corporation of Nigeria Plc and CAP Plc followed successively.

Conversely, FCMB Group Plc, AG Leventis Nigeria Plc, Academy Press Plc, Skye Bank Plc and Unity Bank Plc steered the losers chart after their share prices pared by 14.96 per cent, 10.10 per cent, 9.52 per cent, 7.81 per cent and 7.69 per cent accordingly.

Also commenting on the equity market, analysts at Vetiva Capital Management Limited, in the firm’s weekly report, said, “Notwithstanding the positive close of last week’s session, we note that the gains came in amidst strong market volatility as revealed by the intraday chart. We believe this could spell a mixed market open this week.”

On fixed income market, they added, “With tighter liquidity expected to further dampen market sentiment (following Open Market Operation mop up), we anticipate a bearish start to this week’s trading.

“On currency, we expect the ripple effect of the CBN directive to banks and the restriction on certain banks to continue to put pressure on the naira at parallel market.”

Meanwhile, global markets traded mostly lower this past week. Investors stayed on the sidelines for most part of the week as market sentiment was largely shaped by the much anticipated speech of United States Fed Chair, Janet Yellen, and fickle commodity prices.

At mid-week, despite the Purchasing Managers’ Index for Euro Zone coming at a seven-month high, sentiment in European markets remained weak as oil extended losses after Energy Information Administration data revealed a surprise build in US crude inventory.

At week close, global markets remained mostly in the red as Japanese stocks sold off after core consumer prices fell by o.5 per cent year-on-year against an estimate of a 0.4 [per cent drop, prompting concerns over the effectiveness of the Bank of Japan’s stimulus programme.

US markets also traded lower as investors digested remarks made by Yellen.