NSE opens negative as investors lose ₦162 billion

NSE opens negative as investors lose ₦162 billion

The Nigerian Stock Exchange (NSE) opens the week negative as investors lose ₦162 billion while NSE All Share Index shed 1.27% to 24,026.05 points

Market capitalisation fell to ₦12.53 trillion, consequently year to date loss widened to 10.49% on Monday.

The downturn was impacted by losses recorded in medium and large capitalised stocks, amongst which are Nestle, Beta Glass, BUA Cement, Julius Berger and C & I Leasing.NSE opens negative as investors lose ₦162 billion

The best performers were Cornerstone Insurance whose stocks lifted +10.00% to ₦0.55, NAHCO Plc surged +10.00% to ₦2.20 and Zenith Bank gained +5.25% to ₦16.05.

On the flip side, the worst performers were Beta Glass Plc which dropped 9.95% to ₦61.55, Julius Berger Plc plunged 9.81% to ₦16.55, and Livestock Feeds Plc declined 9.68% to 56 kobo.

Performance across the NSE sectors was largely bearish, as 3 of 5 coverage indices closed lower.

While the NSE banking, insurance closed higher today, advancing by 1,51% and 1.05% respectively, the NSE consumer and industrial goods, oil & gas indices lost 3.18%, 2.35% and 4 bps respectively.

At the end of trading, activity level was strong, as average volume and value traded rose by 36.48% and 95.80% to 190 million units and ₦2.785 billion.

Today’s most traded stocks include Guaranty Trust Bank (61 million units, valued at ₦1.28 billion,

…Access Bank (25 million units, valued at ₦161.35 million) and UBA Plc (9 million units, valued at ₦53.22 million) respectively.

Money market:

At the money market, funding pressures persisted as the market re-opened for the week, reflecting the CRR debit and funding for retail FX auction on Friday.

The financial system opened in deficit of ₦95.3 billion today, from surplus of ₦333.1 billion on Friday.

Nonetheless, interbank funding rates eased marginally, as the Open Buy Back (OBB) and Overnight (OVN) rates moderated by 190 bps and 250bps to 19.60% and 21.00% respectively.

Fixed Income:

Chapel Hill Denham said sentiments remained bullish in the bond market, while yields at the front end of the curve barely changed due to the tight system liquidity.

Discount rates on benchmark NTBs moderated by 2 bps to 2.29% due to some interests in FEB 2021 (-15 bps to 2.23%), while the open market operation (OMO) curve was flat at 4.95%.

Fixed Income Investors stay Bullish on Govt. Securities

However, sentiments stayed bullish on bonds, as yields compressed by an average of 5 bps across the curve to 7.62%.

“We expect inflationary pressures to accelerate in the second half of 2020 due to supply side factors”, analysts at Chapel Hill Denham said.

The investment firm near term prognosis for the bond market remains positive due to the structural imbalance in the fixed income market.

At least until October when the OMO holdings of non-bank investors are fully exhausted, it stated.

Chapel Hill said sequential bond coupon payments between 15th to 27th July, totaling ₦223 billion, will likely keep demand high.

OMO maturities are also elevated between September and October.

As things stand, only a significant tightening of monetary policy by the CBN, via increase in OMO supply, could stop the bond rally.

Chapel Hill said this could happen if the CBN allows the FX rate to move towards fair value.

Currency:

The USD/NGN weakened by 0.13% or 50 kobo to close at ₦386.50 in the Investors & Exporters window (IEW), but stayed flat in the parallel market at ₦461.

The currency pair was unchanged at ₦361.00 and ₦380.69 at the official and SMIS windows, respectively.

NSE opens negative as investors lose ₦162 billion