Bearish sentiments dominated the Nigerian equities market this week as the market closed the week down. The NSEASI shed 0.65% in the week, settling the year-to-date (YtD) return at 36.22%. Market breadth was pegged at 0.62x representing twenty four (24) gainers and thirty-nine (39) losers. nINTBREWemerged as the top gainer for the week with a 21.77% share price appreciation, pushing its price up to NGN51.01. Leading the losers for the week was REDSTAREXwith a share price decline of 13.00%, settling its closing price at NGN4.75.
The banking sector remained the key driver of market activities making substantial contributions to the market volume and turnover. In the coming week, we expect bullish sentiments to prevail in the market as companies continue to release their financial scorecards.
Fixed Income: Average T-Bills Yield Settles at 18.75%
The Open buy-back and Overnight rates recorded respective appreciations of 76.67% and 83.00% WoW. As a result, the average money market rate settled higher at 114.17%.The secondary market for Treasury bills instruments was characterized by strong investors’ appetite during the week, as the average T-bills yield declined on four (4) days of the week. Consequently, the average yield declined by 0.06% WoW to close at 18.75%. The Central Bank of Nigeria (CBN) held a Primary Market Auction (PMA) for Treasury Bills (T-Bills) on Wednesday, the 18th of October, 2017, where instruments worth NGN133.79bn were auctioned.
Average bond yield declined by 0.03% WoW, as bullish sentiments prevailed in the Treasury bonds space. The Naira traded flat at the parallel market to close at NGN363/USD, while the currency depreciated by 0.05% WoWinterbank FX market to close at NGN305.65/USD.
Agricultural Sector: Negative Return Persists
The Agricultural sector index, (MERIAGRI Index), declined further at the close of the week by 0.22%, bringing the YtD return to 65.72%. PRESCOadvanced by 1.49%,to close at NGN68.00. Top on the laggard’s list was LIVESTOCKhaving declined by 5.43% to close at NGN0.87.Activities within the sector mirrored what occurred in the previous week, as the loss on OKOMUOIL dragged the sector performance this week. Although we expect the 9M financial scorecards of the large cap stocks in the sector to be impressive, we do not rule out the possibility of sell pressures on these stocks in the coming week.
Banking Sector: Sector Breadth Settles at Equilibrium
The MERI-BNK index advanced further by 0.63%, driving the YtD return to 79.58%.UBN outperformed the sector, with a share price appreciation of 5.57%. Conversely, DIAMONDBNK led the laggards, waning by 3.51% to close at NGN 1.10.The sector closed positive, despite the sell-offs witnessed on the blue chip counters of the sector. The positive close in the sector could be attributed to the gains witnessed on the first trading day of the week as the MERI-BNK advanced by 1.23%.
Consumer Goods Sector: NSEFBT10 Declines by 1.18% WoW
The consumer goods sector closed in the red zone as the NSEFBT10 index declined by 1.18% WoW, pegging the YtD return at 29.70%. INTBREW (+21.77%) closed as the top advancer for the week at NGN51.01. Conversely, CHAMPION (-7.52%)was the top loser at NGN2.46. During the week, the shareholders of International Breweries Plc., Intafact Beverages Limited, and Pabod Breweries Limitedgave approval for the merger of the three entities. Buy pressures however outweighed the sell in the week, resulting in a WoW negative close. In the coming week, we expect investors taking position on more stocks expected to release impressive 9M2017 results to drive the sector to the positive territory.
Healthcare Sector: GLAXOSMITH Drives Sector Performance
The MERIHLTH index advanced by 13.67% WoW pushing the Year-to-Date return to 51.23%. GLAXOSMITH outperformed the market having gained 14.29% to close at NGN24.00. On the flip side, MAYBAKER (-5.27%) topped the decliners’ chart. Evans Medical Plc (EVANSMED) announced that due to a default on its loans, its lenders (Skye Bank Plc & First Bank of Nigeria Plc) have been granted the right to take over the company’s assets used as collateral against the facilities granted to the company. The sector was pushed into the positive territory following bullish sentiments on the sector’s heavyweights, particularly GLAXOSMITH.
Industrial Goods Sector: DANCEM Drags the Sector
The industrial goods sector closed the week in the red zone as MERI-IND dipped by 1.34%, to settle the year-to-date return at 27.05%. CUTIX (+8.79%) was the best performing stock, closing at NGN2.60. On the flip side, DANGCEM (-1.57%) was the sole laggard to close the week at NGN220.00. Despite the positive sentiments reflected by the sector breadth, the sell pressures witnessed on DANGCEM dragged the sector’s performance. However, given the impressive 9M results released so far and the anticipation of the release of the performance scorecards of other counters in the sector, we posit that the sector will close in the green zone in the coming week.
Insurance sector: CUSTODYINS Outperforms the Sector
As measured by the NSEINS10, the insurance sector closed negative, as it shed 4.22%, settling the YTD return at 12.95%. CUSTODYINS topped the gainers’ chart after its share price advanced by 5.00% to close at NGN3.78. MANSARD led the laggards,shedding 10.36% to close atNGN2.25. The sector closed in the red this week on the back of sell pressures on some of the highly capitalized tickers in the sector. We expect this trend to be sustained in the coming week, given that some of these tickers are still trading at relatively high prices.
Oil & Gas Sector: NSEOILG5 Index Dips 1.75% WoW
The oil and gas sector closed in the red zone, as the NSEOILG5 index pared by 1.75% WoW, pegging its YtD return at -8.53%. ETERNAwas the only gainer advancing by 0.87%, to close at NGN3.48. On the flip side, FO topped the laggards’ list after dipping by 6.98% to close at NGN44.65. Brent crude oil price settled at USD57.09pb as at the time of writing this report on the 20th of October 2017.Activities in the sector were characterized by sell pressures as investors sold down on counters that had witnessed share price appreciation in recent weeks. We expect an upturn in the coming week as investors take position on some of the sector’s large cap stocks, ahead of the release of the 9M2017 financial results.
SERVICES SECTOR: Sector Closes in the Red
The Services sector, as measured by the MERISER index, closed in the red zone for the week having pared by2.38% WoW to settle the Year to Date return at -5.62%. REDSTAREX led the losers’ chart shedding 13.00% to close at NGN4.75. The services sector was awash with bearish sentiments in the week as price declines were noted on stocks that had gained significantly in previous weeks. We expect a reversal of this trend in the coming week.