Naira trends positively from highest 4-year depreciation as NGX sheds N190bn in 3 days

The Nigerian Naira moderated from its highest depreciation level in four years in the parallel market to N520 per dollar after reaching N525 following the Central Bank of Nigeria’s (CBN) ban of FX sales to bureau de change (BDCs). But at the Importers’ and Exporters’ window of the foreign exchange market, the Naira pared gains, depreciating by 0.02 percent as the dollar was quoted at N411.67 as against the last close of N411.60. Most participants maintained bids at between N400 and N413 per dollar.

At the local equities market, bearish sentiment lingered in the bourse for the third straight day which erased the gains seen so far this week with N190 billion losses in three days as a result of sell pressure witnessed in the local bourse.

Thursday’s trading saw the local bourse trending downward with N159.5 billion loss on the back of sell pressure in BUA Cement (-5.2%), Guaranty Trust Holding Company (-1.7%), and Dangote Sugar (-1.6%), with the All-Share index falling by 0.79 percent to 38,484.82 points. Accordingly, the market year to date loss worsened to -4.4 percent while the market capitalisation declined to N20.1 trillion.

On the other hand, the level of trading activity improved, underpinned by increases in the volume and value traded, which amounted to 9.5 percent and 5.3 percent to 260 million units and N2.0 billion respectively. The most traded stocks by volume were Oando Plc (56.3m units), Guaranty Trust Holding Company (15.3m units), and Jaiz Bank (14.9m units) while Guaranty Trust Holding Company (N444.9m), Oando Plc (N288.5m), and Seplat Petroleum (N169.6m) led by value.

Performance across sectors was bearish with the industrial goods and oil & gas indices topping the laggards, down 2.0 percent and 1.9 percent, respectively, driven by price depreciation in BUA Cement (-5.2%) and Oando Plc (-9.7%).

Similarly, the banking and consumer goods indices fell by 0.8 percent and 0.4 percent, respectively, due to sell pressure on Guaranty Trust Holding Company (-1.7%), Access Bank (-1.6%), Nascon Plc (-3.7%), and Dangote Sugar (-1.6%).

On the other hand, the insurance and ICT indices gained 3.2 percent and 0.2 percent, respectively, on the back of buying interest in Regency Alliance Insurance (+9.8%), Consolidated Hallmark Insurance Plc (+9.3%), Mutual Benefits Assurance (+5.4%), and MTN Nigeria (+0.4%).

Investors’ sentiment remained unchanged at 0.8x as 17 stocks advanced while 21 stocks declined. Tripple Gee (+10.0%), Regency Alliance Insurance (+9.8%), and Consolidated Hallmark Insurance Plc  (+9.3%) led gainers, while Oando Plc (-9.7%), UAC Nigeria (-8.9%), and Linkage Assurance (-7.7%) led decliners.

At the close of the day, the NGX 30 Index decreased by 0.93 percent at 1,632.44 points as against 1,647.73 points on the previous day. Market turnover closed with a traded volume of 93.07 million units. MTN Nigeria and Zenith were the only gainers, while BUA Cement and UBN were the key losers.

The treasury bills secondary market closed bullish as unmet demand at Wednesday’s Primary Market Auction (PMA) filtered into the secondary market. Consequently, the average yield across the curve decreased by 6 basis points to close at 6.26 percent from 6.32 percent on the previous day. Average yields across short-term and medium-term maturities declined by 27 basis points and 12 basis points, respectively. However, the average yields across the long-term maturities increased by 7 basis points.

Moreover, the CBN held its scheduled Primary Market Auction on July 28, selling NT-Bills worth N265.24 billion across the 91-day (N3.17 billion), 182-day (N3.54 billion), and 364-day (N258.53 billion) tenors. The stop rates for the 91-day and 182-day remained unchanged at 2.50 percent and 3.50 percent, respectively. However, the stop rate for the 364-day tenor cleared lower at 8.20 percent (-47 basis points). The auction was oversubscribed by 110 percent, with bid-to-cover ratios settling at 0.59x (91-day), 0.18x (182-day), and 2.73x (364-day).

In the OMO bills market, the bears gained momentum as the average yield across the curve increased by 10 basis points to close at 8.71 percent as against the last close of 8.61 percent. Selling pressure was seen across short-term, medium-term, and long-term maturities with the average yields expanding by 2 basis points, 20 basis points, and 8 basis points, respectively. Yields on 17 bills advanced with the 4-Jan-22 maturity bill recording the highest yield increase of 31 basis points.

Elsewhere in the bond market, buying interests were witnessed with the market closing on a mildly positive note and stoking the average bond yield across the curve to clear lower by 4 basis points to close at 9.38 percent from 9.42 percent on the previous day. Also, the average yields across short tenor and long tenor of the curve declined by 5 basis points and 3 basis points, respectively. However, the average yields across the medium tenor of the curve increased by 2 basis points.

The 24-JUL-2045 maturity bond was the best performer with a decline in yield of 55 basis points, while the 18-MAR-2036 maturity bond was the worst performer with an increase in yield of 15 basis points.