The local bourse closed negative last week, as the NGX ASI declined by 0.70%, closing negative in 3 of the 5 trading sessions. It fell on significant decreases in bellwether stocks such as VITAFOAM (-9.96%) and. Consequently, at 49,695.12 points, the equities market’s Year-to-Date return decreased to 16.34% as market capitalisation declined by 0.70% to close at N26.81 trillion.
Market breadth (a measure of investor sentiment) weakened in the just concluded week, falling from 2.05x to 0.61x as 36 stocks depreciated against 22 stocks that appreciated. CHAMS and PZ topped the market gainers with 19.23% and 12.80% WoW, respectively, while JAPAULGOLD and HONEYWELL were the top losers, with declines of 12.12% and 11.07%, respectively WoW.
The activity level weakened as the total trade volume improved by 20.52% while the total value declined by 27.82% WoW, respectively. A total turnover of 0.95 billion shares worth N9.33 billion in 18,525 deals were traded during the week by investors on the floor of the Exchange. Trading in the top three equities, namely Sterling Bank Plc, United Bank for Africa, and Transnational Corporation Plc (measured by volume), accounted for 472.701 million shares worth N1.164 billion in 2,333 deals, contributing 49.77% and 12.48% to the total equity turnover volume and value respectively.
Outlook for the week
We expect positive performance to return in the coming week as the equities market still presents decent opportunities for investors chasing positive real returns on investments.
The Nigerian Fixed Income Market
Last week, there was mixed sentiment in the bond market as two of the four tenor yields under coverage closed lower, the 5 and 10-Year tenor yields inched higher by 3bps and 1bp respectively. The yields on the 3 and 30-Year bonds compressed by 13bps and 4bps respectively WoW.
There was bullish sentiment in the Nigerian Treasury Bills Market as the 91 and 182-day paper yields compressed by 3bps and 1bp respectively WoW while the 364-day yield closed flat at 6.78%.
In the Money Market space, the Open Repo (OPR) and Overnight (O/N) rates decreased to 8.50% and 9.00% from 12.00% and 12.50% respectively WoW.
Outlook for the week
We expect market activity in the fixed income market to be influenced by liquidity levels and foreign investor participation.
Local Economic Updates
The Central Bank of Nigeria poured $7.6 billion into the economy in just the first five months of this year to stabilize the value of the naira. This information is contained in the monthly economic reports on foreign exchange market trends published by the banking regulator. The CBN’s summary in the banking regulator’s monthly economic updates on foreign exchange market developments revealed the lengths to which it went to defend the naira. The CBN reportedly interfered in the markets with $1.65 billion, $1.39 billion, and $1.82 billion in January, February, and March, and $1.56 billion and $1.18 billion in April and May, respectively.
Nigeria has moved to boost the production of wheat in the country as it partners with food and agri-business giant, Olams International Limited, to develop seed varieties of the grain that are suitable for its climate, which will boost local output and reduce the country’s dependence on importation of the product. This is coming at a time that the global food system has been in crisis due to the pressure from the Russia-Ukraine war. According to Bloomberg, this was made known by the Country Head for Olam-Agric Nigeria, Ashish Pande, during a virtual media briefing where he said that Olam unit Crown Flour Mill has produced the nucleus seeds suitable for Nigeria’s topography and climate.
The federal government and cryptocurrency platform Binance Holdings Ltd. are discussing establishing a digital economic zone to help entrepreneurs fast-track blockchain technology. According to a statement from the Nigeria Export Processing Zones Authority, the partnership aims to build a digital hub “similar to the Dubai virtual free zone.
MTNN said it is in the process of issuing a new note in the form of commercial paper in order to raise N23 billion towards meeting some obligations falling due in the short term. The final tranche of the two notes was simultaneously issued in April with a combined value of N127 billion, the transaction completes a broader debt-raising programme in which N150 billion will be sourced in all. The two papers launched with varying maturities of 184 and 254 days at 7.5 percent and 8.5 percent rates respectively, each instrument priced according to the length of its validity.