Equities market depress further as big caps slide

EQUITIES market closed on a negative yesterday as the Nigerian Stock Exchange (NSE) All Share Index (ASI) depreciated by 0.37 per cent to close at 33,478.42 basis points, compared with the previous 0.35 per cent depreciation.

Its Year-to-Date (YTD) returns currently stands at 3.40 per cent. Market breadth also closed negative as Berger led 22gainers against 24losers, topped by Guinness at the end of yesterday’s session – an improved performance compared with previous outlook.

Market turnover equally closed negative as volume moved down by 12.97 per cent against 2.97 per cent decline in the previous session. ETI, Zenith Bank and Access Bank were the most active to boost market turnover, while Guinness and ETI topped market value list.

Volume shockers included ETI, which leads the list of active stocks that recorded impressive volume spike at the end of yesterday’s session.

Meanwhile, the recent rise in Nigeria’s headline inflation has signalled the erosion of the purchasing power of the country’s bonds future cash flows. The headline inflation in May picked up from 8.7 per cent year-on-year (yoy) to nine per cent, against most analysts’ expectation of circa 8.8 per cent yoy.

To hedge against this potent risk occasioned by bond’s worst enemy (inflation), Nigerian bond investors may be fielding for higher yield to compensate inflation risk. This situation is more realistic following recent weak demand from offshore investors, since JP Morgan’s ‘threat” to delist Nigeria from its local currency government bond indices weighs appetite.

“We expect local currency bond yields to rise, in line with the current short-term inflation trend and consequent depreciation on bond prices,” said research analysts at Lagos-based Cowry Asset Management Limited.

The Debt Management Office (DMO) was billed to hold its monthly auction of FGN bonds in a targeted raise of N80 billion yesterday.

The DMO will issue N40 billion (15.54 per cent February 2020 (five year), N15.22 billion (14.20 per cent March 2024 (10-year), and N25 billion (12.149 per cent July 2034 (20-year) worth of bonds (all re-openings).