Daily Market Update –September 16, 2013

Trading activities at the Nigerian Stock Exchange (NSE) was bearish, yesterday, as market capitalisation of equities depreciated by 0.65% or ₦75 billion to close at ₦11.42 trillion, from ₦11.49 trillion.

Also, the NSE’s All-Share Index fell by 0.65% or 236.19 basis points to close at 35,861.88 points.

With the exception of the NSE-ASeM, which closed flat at 962.31 basis points, all other indices closed lower.

The banking sub-sector led on the activity chart, accounting for 65.02% of the 196.58 million shares, valued at ₦2.09 billion exchanged in 4,027 deals for the day.

Inter-bank Market
The Naira traded flat on the interbank market, yesterday, as lenders exited the U.S. currency to cover their funding needs on the local currency, amid tight naira liquidity.

The Central Bank withdraw ₦242 billion from the banking system two weeks ago to enforce a new cash reserve requirement (CRR), aimed at tightening naira liquidity to support the currency.

The regulator removed ₦1 trillion in August when it first announced a hike to CRR for banks to take on public sector funds to 50%, from 12%.

The naira closed at ₦161.9 to the greenback, the same level it closed on Friday.

At the official foreign exchange window, the Central Bank sold $300 million at ₦155.76 to the dollar, the same amount and rate it auctioned last Wednesday.

European shares hit five-year high
On the foreign scene, European stocks hit five-year highs, on Monday, after news that Lawrence Summers has pulled out of the race to lead the United States Federal Reserve, while an international deal over Syria also boosted risk appetite.

Reuters reported that the FTSEurofirst 300 hit an intraday high at 1,262.25, its highest level since mid-2008, while Germany’s DAX hit 8626.11 –an all-time high.

Investors took the view that Summers’ decision meant a more gradual approach to policy tightening, as he had been seen as less supportive of the bank’s monetary stimulus programme than the other main candidate, Janet Yellen.