Equities Open Week Lower as Investors Await FX Policy

Nigerian equities opened the week on a bearish note as the All Share Index (ASI) shed 0.5% to close at 27,103.89 points, bringing MTD and YTD losses to -2.0% and -5.4% respectively. Similarly, market capitalization declined N44.4bn to N9.3tn. The weakness in the broader index today was mainly driven by profit-taking in WAPCO (-4.4%) and OANDO (-5.0%). Market activity was biased towards large-caps as volume traded declined 20.1% to 152.3m while value traded surged 40.5% to N2.3bn respectively.

Sell-off in WAPCO Weighs on Industrial Goods Index
Performance of sector indices generally reflected the overwhelming bearish sentiment for equities with all sector indices - save for the Banking index (+0.8%) – closing negative. The sustained positive momentum in the Banking Index  - into the third trading session - was driven by further bargain hunting in ACCESS (+4.2%), GUARANTY (+0.7%), DIAMONDBNK (+5.7%) and FIDELITYBK (+4.0%). The Industrial Goods index topped decliners, down 2.0% as investors sold-off on WAPCO (-4.4%), while this was trailed by the Insurance and Consumer Goods indices which declined 0.8% and 0.7% against the backdrop of losses in MANSARD (-2.4%) and DANGSUGAR (-2.5%) respectively. Profit-taking in OANDO (-5.0%) dragged the Oil & Gas index (-0.5%) into the red.

Sentiment Remains Weak on FX Policy Uncertainty
Aggregate sentiment on the Bourse, measured by market breadth retraced from a slightly positive close last Friday to close negative today at 0.7x as 15 stocks closed in the green while 22 declined. Top performers were CHAMPION (+5.9%), DIAMONDBNK (+5.7%), ACCESS (+4.2%), NEM (+4.2%) and FIDELITYBK (+4.0%) while UNITYBNK (-5.8%), OANDO (-5.0%), HONYFLOUR (-4.6%), INFINITY (-4.5%) and WAPCO (-4.4%) led laggards. The bearish close to today’s trading session was in line with our expectation of a restrained performance in equities due to uncertainty regarding the CBN’s FX Policy unveiling and broader investors’ concern on economic and company fundamentals. Local media sources have suggested the policy may likely be unveiled this week but we do not expect this to filter into market valuation until a definite statement from the CBN.