Analysts Project Bullish NSE as Big Banks Release Earnings Reports

The equities segment of the Nigerian Stock Exchange (NSE) bucked bearish trend Wednesday as the local bourse gains N3.9 trillion despite shrinking investors’ sentiment.

Analysts Project Bullish NSE as Big Banks Release Earnings Reports

As Tier-1 capital banks are set to release their first half 2020 results, analysts have predicted that the equities market would stay positive.

In the Tier-1 capital category, only First Bank of Nigeria Holdings Plc has released its first half earnings result.

Zenith, Access, Guaranty Trust Bank and United Bank for Africa are yet to make the first half report available to the public.

The Nigerian equities market ended the trading week on a positive note, with the Nigerian Stock Exchange (NSE) All Share Index advancing by 2 basis points (bps) to 25,309.37 points.Analysts Project Bullish NSE as Big Banks Release Earnings Reports

Year to date loss moderated to negative 5.71% while stock market capitalisation closed higher to ₦13.204 trillion.

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Chapel Hill Denham projected that sentiments on NSE will remain positive amid expected Tier-1 banks H1-20 results next week.

“Specifically, we are expecting Guaranty Trust Bank, Access Bank and Zenith Bank, amongst others to publish their results”, the firm noted.

Records shows that financial system liquidity opened higher at N740 billion from N378 billion on Thursday.

However, funding pressures spiked as DMBs provisioned for the retail FX auction.

The Open Buy Back (OBB) and Overnight (OVN) rates increased by 12.40% and 12.90% to 13.90% and 14.90% respectively.

“We expect funding pressures to ease next week, bolstered by N321.48 billion OMO maturities scheduled for Thursday.

In the fixed income, sentiments were mixed in the closing trading session of the week.

Referencing the development, at the front end of the curve, discount rates on benchmark NTBs expanded by an average of 12bps to 1.74%.

This was driven by mid days to maturity (DTMs) rising +42bps to 1.66%.

In the OMO segment, analysts said appetite remained strong, as the OMO benchmark curve compressed by 5bps to 3.15%, driven by short (-3bps to 2.97%) and long (-11bps to 3.61%) DTMs.

Performance in the bonds market were no really different.

Sentiments were mixed, as yields compressed at the short end of the curve, dropped by -38bps to 5.23%), while the apathy for duration was sustained, as yields on intermediate (+6bps to 7.34%) and long (+2bps to 9.37%) bonds advanced.

In the near term, Chapel Hill said the high level of liquidity in the financial system should continue to provide support for yields, although duration aversion may persist as the bond rally losses steam.

Analysts also stated that the market will also be looking forward to the Q3-2020 NTB auction calendar.

Analysts Project Bullish NSE as Big Banks Release Earnings Reports


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