BY BAMIDELE FAMOOFO
The declines in three of the four trading sessions on Nigerian Exchange Limited in the week ended October 7, 2022, culminated in a 3.30 percent week on week loss for the All Share Index, the most since the week ended April 3, 2020.
Consequently, the ASI’s year-to-date return fell to 10.85 percent, while the market capitalization slipped by N661.64 billion w/w to close at N25.79 trillion.
The major drags on the index were selloffs in telecom heavyweights Airtel Africa Plc, the most capitalized stock on the NGX, which knocked its share price down by 10 percent w/w. The shares of MTN Nigeria Plc, the most profitable stock in the third quarter ended September 30, 2022 also dropped by 0.4 percent in the week.
Steep declines recorded in the shares of leading Agro stocks, Okomu Oil Plc and Presco Plc also contributed to the big loss recorded by the ASI in the review period. Both stocks lost 9.98 percent and 9.99 percent w/w, respectively.
The banking sector, especially Tier 1 banks were not spared in the losing streak as the most profitable and capitalized among them, Zenith Bank Plc recorded a loss of 2.25 percent per share in the week.
GTCO Plc recorded a loss of (-4.23% w/w), FBNH (-2.94% w/w), STANBIC (-6.00% w/w), ACCESSCORP (-5.59% w/w) and UBA (-3.57% w/w). The banking sector loss may be attributed to the continued fallout from the outcome of the last monetary policy meeting.
Analysis of Friday’s market activities showed trade turnover settled lower relative to the previous session, with the value of transactions decreasing by 31.94 percent. A total of 137.28 million units of shares valued at N1.71 billion were exchanged in 3,845 deals. GTCO (+0.29%) led the volume and value charts with 33.79 million units traded in deals worth N573.80 million.
Market breadth closed negative at a 1.08-to-1 ratio, with declining issues outnumbering advancing ones. MAYBAKER (-9.78%) led thirteen (13) others on the laggard’s table, while FTNCOCOA (+7.14%) topped twelve (12) others on the gainer’s log.
The overnight (OVN) rate in the money market increased by 8bps w/w to 17.3 percent following the already tight system liquidity, with average system liquidity level settling lower during the week, but it remained positive at a net long position of N113.17 billion as against net long position of N182.97 billion in the previous week.
It is however expected that the OVN rate will trend northward this week, as the thin inflow from OMO maturities (N10.00 billion) may not be sufficient to keep system liquidity afloat.
The bears dominated the Treasury bills secondary market last week as market participants exited positions to provide some respite to their funding obligations. Consequently, the average yield across all instruments expanded by 17bps to 7.9 percent. However, across the segments, the average yield dipped by 2bps to 10.3 percent at the OMO secondary market, while most of the yield expansion was witnessed at the NTB segment (+17bps to 7.3%).
Given the tight liquidity picture, experts at Cordros Research expect the average yield on T-bills to maintain its uptick this week. Also, Cordros expect quiet trading at the NTB market as participants position for this week’s PMA, with N190.89 billion worth of maturities on offer.
Trading in the Treasury bonds secondary market was broadly bearish in the review week, as demand for FGN bonds remained tepid. It is believed that this reflects expectations regarding higher yields in the near term. Consequently, the average yield expanded by 24bps to 13.5 percent.
Across the benchmark curve, the average yield was higher at the short (+49bps), mid (+11bps), and long (+17bps) segments, following sell-offs of the MAR-2024 (+177bps), APR-2032 (+21bps), and MAR-2035 (+52bps) bonds, respectively.
“We maintain our stance of an uptick in yields in the medium term as the FGN’s borrowing plan for 2022FY and expected fiscal deficit point towards an elevated supply level over the rest of the year,” Cordros disclosed.