Financial markets in the country ended May on a bearish note and began the month of June in a like manner.
Here is Nairametrics’ roundup of what happened last week and what to expect this week.
Equities Market
Trading was shortened to four days this week, due to a public holiday on Tuesday marking Democracy Day. May ended on a bearish note with the All Share Index tilting to negative at 0.36%.
Friday was much worse as the NSE moved further into the red, with the All Share Index closing down at 3.38%. Year to date, the index is now in the negative territory at 3.73%.
A total of 2.6 billion shares valued at N94.7 billion were traded in 19,715 deals. Trading was largely boosted by the off-market transaction in Stanbic IBTC shares.
Eterna Plc was the week’s top gainer, gaining 20.11%. Cement Company of Northern Nigeria (CCNN) was the next gainer with a 16.46% gain. Mutual Benefits Assurance rounds up the top 3 with an 8.57% gain.
International Breweries was the biggest loser this week shedding 22.39%.
Lafarge Africa shed 16.05% this week, while Forte Oil dropped 13.64% this week.
What to expect this week
The sell off is likely to continue this week as more foreign investors pullout of equities. The feelers we get is that the stock market rout is bound to continue. We also expect to see some bargain hunters start to cherry pick stocks that may appear cheap.
Foreign Exchange market
The Central Bank of Nigeria (CBN) sold a total of $334.1 million in the inter-bank foreign exchange market. The Governor of the apex bank also embarked on an unscheduled inspection of banks in Abuja to ensure compliance with its instructions to sell foreign exchange to all parties.
The Naira depreciated by 0.03% to N306 at the CBN’s window. On the parallel market however, the naira appreciated by 0.82% to close at N363.
What to expect
The CBN has a buffet of a strong reserves so we don’t expect the Naira to depreciate marginally. Foreign investors selling off may put some pressure on the exchange rate but we believe the CBN is more than capable to meet that demand.
Money market
The CBN held a Primary Market Auction (PMA) last week, selling a total of N50 billion in bills. N4.9 billion worth of 91-day bills, N24.8 billion worth of 182-day bills, and N19.8 billion worth of 364-day bills were sold.
Stop rates were 10%, 10.3% and 11% respectively. The stop rate is the maximum rate at which the CBN is willing to sell each category of treasury bills.
Demand was heavy across all categories, especially the 364-day category where N62.9 billion worth of subscriptions were made. Investors may be positioning at the longer end in anticipation of lower rates.
