Bearish open to the week
Nigeria's stocks closed yesterday in the red after skidding 0.91 percent to close at 25,802.54. Three major stock indices tumbled {Industrial Goods (-2.25%), Oil & Gas (-0.06%) and Insurance (-0.87%)} in a strong pace of selloff led by MANSARD (-4.9%), DANGCEM (-4.2%) and WAPCO (-0.8%).
The Banking stocks remained resilient, gaining 0.80% on positive showing by GUARANTY (+3.0%) and ACCESS (+0.4%).
However, we expect local fund managers to pile more into short-term bonds at higher yield and liquid Treasury bill market as current stock valuation offers less attractive opportunity to take position in good fundamental stocks.
Broad market valuation closed at (11.8x P/E and 3.8% Dividend Yield) amid elevated YTD return of 36.13%.
A boost in activity level
Defying negative market performance, aggregate turnover improved by 30.47% as investors exchanged a total of 368 million shares worth N6,273 billion in 3,729 deals. GUARANTY closed as the highest traded stock for the day (40% of aggregate transaction size). The top ten stocks constituted 89% of market turnover.
Market breadth closed positive
Market breadth closed positive with 25 equities advancing in price and 17 others declining. Top gainers for the day include FLOURMILL 8.73 percent, TRANSCORP 5.97 percent, HONYFLOUR 5.00 percent and LEARNAFRICA 4.94 percent. On the flip side, VITAFOAM, MANSARD, SCOA and PAINTCOM shed 5.00%, 4.88%, 4.74% and 4.62% accordingly.
Fixed income Market
The bond market extended its bearish run; closing 1bps higher to 16.51% as demand for local bond remain down. The short end saw downbeat demand, with bonds maturing in 7-year recording expansion (5bps on average), while the intermediate and long dated notes closed flat at 1bps and 0bps respectively. Conversely, average yield in the treasury bills market purged 4bps to 18.54% following increased demand at the short end of the curve. We do not expect significant liquidity to return to the market until possibly the end of the month on expected maturities.