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Investors show preference for fixed income instrument

Developments in the Nigerian investment space for the week ended Friday, 11th August, 2017, showed that investors still showed high preference for fixed income instruments with guaranteed earnings.

The fixed Income segment of the Nigerian money market showed that money market rates expanded across all tenors ASAT Friday, August 11, 2017, as the Central Bank of Nigeria (CBN’s) N20.5billion OMO auction, at 17.95 per cent and 18.55 per cent stop rates, squeezed system liquidity.

The 1month and 3month NIBOR rates inched up 95bps and 99bps to 19.04 per cent and 20.10 per cent respectively while the 6month NIBOR rate increased by 38bps to 23.54 per cent.

At the bond market, yield movement remained largely muted as the CBN’s continued squeeze on system liquidity constrained activity levels.

The yields on the 5yr, 7yr and 10yr benchmark bonds were unchanged at 16.36 per cent, 16.25 per cent and 16.53 per cent respectively.

As trading resumes Monday in the money market and the capital market, cross section of analysts have forecast that market activity would be driven by liquidity levels.

During the week ended Friday August 11th ,the Nigerian Naira appreciated by +0.47 per cent to N364.78 against the USD and +0.16 per cent to N473.32 against the GBP at the Import Export Forex window (IEFX) window while the Naira declined -0.48 per cent to N430.08 against the EUR.

However, at the parallel market, the NGN on Friday, closed flat at N367, against the USD, N477 against the GBP and N430 against the EUR. Going forward this week, experts expect the CBN to continue its FX intervention sales which should be supportive of the local currency.

Activities in the equities market ended the week on a positive note as the benchmark NSE-ASI gained +0.25% to berth at 38,198.60pts. The index YTD return now stands at +42.14% while market capitalisation rose to N13.16trillion.

Major sectoral indexes closed positive: Industrial sector gained +2.01 per cent, Oil & Gas grew by +0.57 per cent, banking sector appreciated by 0.20 per cent, while the consumer goods sector also added 0.03 per cent.

The Nigerian equities market showed that the NSE All- Share Index (ASI) closed the week higher at 38,198.60 from 38,102.85 previous ASI. The market capitalization closed the week at N13.17 trillion.

The market recorded a day change of 0.25 per cent, week to date return of 2.07 per cent and month to date return of 6.57 per cent. The market’s year to date returns stood at 42.14 per cent, and a ytd high of 38.198.60 and a ytd low of 24, 581.99

Analysts projects that this new week would commence on bullish trend which may be halted towards week end for profit taking. Meanwhile, while expectation of earnings release from the likes of UBA, Access Bank and Guaranty Trust Bank could provide some level of support for the index performance, experts highlight potential for profit-taking on recent gains in the index.

Bonny Amadi

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