- FGN bond yields moderate as bullish sentiment dominates
BY BAMIDELE FAMOOFO
Bargain-hunting activities took grip of the local bourse for another week amid reactions to earlier corporate earnings hitting the market ahead of the quarter-end. Fund managers in a quest to close the first quarter higher and at the same time reposition for the second quarter engaged in window dressing, according to stock market analysts.
The lacklustre performance on the local bourse continued as the benchmark index posted another decline by 0.06 percent week on week to 54,857.96 points despite buying interest in some mid and large cap stocks as a result of the release of full-year audited reports of corporates.
In the same manner, the market capitalization shed 0.06 percent week on week to N29.89 trillion as it wiped N18.12 billion in losses from investors’ pockets while the year-to- date return tanked to 7.04 percent from 7.11 percent last week.
Across the sectors in the review week, performance was largely on a bull trend across the indices under the purview of experts at Cordros Research, except for the Oil & Gas sector which lost 2.02 percent week on week from sell pressure.
On the other hand, the Banking index led the gainers with +3.67 percent gains week on week as the Insurance, Consumer Goods and Industrial Goods sectors trailed the banking index in the green zone to close the week by +1.61 percent, +0.94 percent and +0.36 percent from the previous week.
At the close of the week, the level of market trading activities was positive as the total number of deals surge by 27.81 percent week on week to 17,917 as stockbrokers recorded a 22.63 percent rise in traded volumes for the week to 2.07 billion units valued at N17.56 billion, indicating an advancement of 58.70 percent week on week. Meanwhile, the top-gaining securities for the week were OANDO (+34%), CHAMPION (+13%), and UPDC (+11%), while the week’s losers were DANGSUGAR (-7%), UCAP (-7%), and DANGCEM (-6%).
In this new trading week, market pundits expect the current trend of positive sentiments and uptrend to continue as the market repositions for the new trading quarter and the gradual transit into the dividend earning season while players analyze recent earnings inflow.
Also in the review week, the value of FGN bonds decreased as traders’ bids were filled at higher yields for most of the maturities tracked.
The jump in rates for treasury bills in the primary market contributed to the bearish momentum seen at the longer part of the yield curve.
Specifically, the 10-year 16.29 percent FGN MAR 2027, 15-year 12.50 percent FGN MAR 2035, 20-year 16.25 percent FGN APR 2037, and 30-year 12.98 percent FGN MAR 2050 bonds fell by N0.77, N0.32, N0.91, and N2.59, respectively; their corresponding yields expanded to 12.73 percent (from 12.50%), 14.75 percent (from 14.69%), 15.10 percent (from 14.95%), and 15.47 percent (from 15.00%).
Meanwhile, the value of FGN Eurobonds traded on the international capital market appreciated further for all maturities tracked due to sustained bullish sentiment. Specifically, the 10-year 6.38 percent JUL 12 2023, the 20-year 7.69 percent FEB 23 2038, and the 30-year 7.62 percent NOV 28 2047 gained USD 0.99, USD 3.48, and USD 2.79, while their corresponding yields increased to 10.73 percent (from 14.11%), 12.76 percent (from 13.51%), and 12.43 percent (from 13.00%), respectively .
In this new week, it is expected that FGN bond prices will decrease (with a corresponding increase in yields) a t the OTC market amid the expected strain in financial system liquidity.