Commentary
- MPC raises interest rates by 200bps from 12% to 14%
- The Naira started to see increased levels of volatility on the interbank market
- CBN releases circular on Provisioning for Foreign Currency Loans
- The US Fed keeps rates unchanged
- Brent crude ends the week lower, just above $41 per barrel
Gains in mid-week saw Nigerian stocks end higher WoW, halting several weeks of declines. The market benchmark climbed 127bps WoW to close at 28,009.93pts, thus pairing the YtD decline to -221bps. Market capitalization also climbed N120.37bn to N9.62tn.
The key driver of market performance being earnings release, which came in mixed. The 40% depreciation of the Naira impacted corporate earnings in varying degrees. Those long the US Dollar seeing significant FX gains impacting earnings positively while firms with foreign currency borrowings seeing earnings come under pressure.
Sector wise, the Banks led the way climbing 905bps on gains in ACCESS, GUARANTY & ZENITH – these largely on the anticipation that FX gains and trading income will boost earnings. On the hand, the Industrials were down 242bps on weakness in WAPCO & DANGCEM, which saw a dip in After-Tax earnings for H1’2016. The Consumers were also down 38bps while the Oils saw WoW declines of 516bps, on weakness in FO & SEPLAT in the earlier part of the week. However, gains in the downstream players at the end of the week following strong H1’2016 numbers tapered the losses.
Activity levels were higher for the week, with the bourse seeing a turnover of 1.87bn shares valued at N16.33 compared to the 1.35bn shares valued at N9.29bn that traded in the previous week. The action was driven by block trades in ZENITH, GUARANTY, UBA, FBNH & ACCESS. We note that participation involved both foreign and local investors.
A draft of H1’2016 were release last week, the numbers were mixed, with the likes of HONYFLOUR, DIAMONDBNK, NESTLE, TRANSCORP, FIDELITYBK, FBNH, DANGCEM, SEPLAT & 7UP all reporting lower After Tax Earnings while the likes of PRESCO, OKOMUOIL, FLOURMILLS, MOBIL & TOTAL all seeing after tax earnings rise sharply.
The Week Ahead
- Treasury Bills auction on Wednesday, we expect yields to climb higher driven by the MPC’s rate hike
- The downstream oil marketers should be in focus on the NSE, given the impact of deregulation on their earnings.
- Q2 2016 Capital Importation and FDI report is due from the NBS on Friday, 05 August
Market Snapshot
| All-Share Index: | 28,009.93pts |
| Market Cap (NGN): | N9.62tn |
| Market Cap (USD): @313/$ | $30.73bn |
| Total Volumes Traded: | 1.87bn |
| Total Value Traded (NGN): | N16.33bn |
| Daily Average Value Traded – WtD: | N3.27bn |
| Advance/Decline Ratio: | 35/31 |
Risers & Decliners:
- Top Risers:
MRS (+21.45%; N38.78); GUARANTY (+14.36%; N24.05) & DANGFLOUR (+12.86%; N4.65)
- Top Decliners:
SKYEBANK (-17.65%; N0.70); NEM (-12.00%; N0.88) & REDSTAREX (-10.57%; N4.23)
