Financial Markets Today
Global equities rallied today, on the back of improved investors risk-on sentiments on risk assets, with the Dow Jones Industrial Average (DJIA), S&P 500, NASDAQ, German DAX, London FTSE, French CAC and Chinese SHANGAI all gained ca +0.19%, +0.37%, +0.68%, +0.99%, +0.97%, +0.52% and +2.22% respectively. This comes as trade talks between U.S. and China are set to resume after both President – Donald Trump and Chinese Premier – Xi Jinping announced a suspension of new implementation of tariffs on imports from either nation, at the recently concluded G-20 summit.
We expect investors sentiments on risk assets to remain positive in the short term with the announced re-start of trade negotiations between the world’s 2 largest economies – U.S. and China. We also expect the continuation of the production-cut deal by the Organisation of Petroleum exporting Countries (OPEC) to further boost investors positive sentiments of risk assets in commodity dependent economies in the near term.
MONEY MARKETS
CAPITAL MARKETS
FOREIGN EXCHANGE
COMMODITIES
Banking system liquidity opened positive today at ca ₦485.60bn higher than ₦462.09bn it opened with on last week Friday. The Central Bank of Nigeria (CBN) conducted an Open Market Operation (OMO) auction today, where it sold a total of ₦400bn at a maximum rate of 12.40%.
Treasury Bills
The treasury bills secondary market kicked off the week on an interesting note today, as the CBN announced an OMO auction to mop up excess liquidity from the interbank market, the first in 3weeks. The bullish trend was snapped with moderate sell offs across the curve, as market anticipated the OMO closing levels. Average yields gained ca 6bps day-on-day with the 30 April 2020 maturity closing at 11.46% from 11.36%. Kindly find details of the auction below:
| Tenor | 101-Days | 225-Days | 353-Days |
| Maturity Date: | 10-Oct-19 | 12-Mar-19 | 18-Jun-20 |
| Amount Offered: | ₦50.000 billion | ₦150.000 billion | ₦200.000 billion |
| Subscription | ₦6.06 billion | ₦56.81 billion | ₦700.79 billion |
| Amount Allotted: | ₦4.06 billion | ₦43.11 billion | ₦352.83 billion |
| Range of bids | 11.2000% – 11.6000% | 11.5000% – 12.1000% | 12.0000% – 12.4000% |
| Stop Rate | 11.4000% | 11.8400% | 12.4000% |
Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded higher day-on-day at 8.14% and 8.93% from 4.00% and 4.64% respectively. Average fixed deposit rates amongst banks monitored showed:
– tier-1 rated banks at 3.00% for 30 – 60 days tenor on ₦10mln – ₦100mln.
– tier-2 rated banks at 7.00% for 30 – 60 days tenor on ₦10mln – ₦100mln.
Bonds
The bonds secondary market kicked off the week on a bullish note today, as demand persisted at the short-to-mid end of the curve. This comes off the back of ca ₦350bn June 2019 maturity as average yields shed ca -5bps day-on-day with the July 2021 paper closing at 13.51% from 13.78%.
Eurobond
The week kicked off on a bullish note in the nation’s Eurobonds market today, as investors’ reacted positively to a trade truce reached by U.S and China at the recently concluded G-20 summit. Average yields shed ca -18bps day-on-day, with the 2049 paper closing at 7.91% from 8.08%.
Equities
The Nigerian equities market kicked off the week on a negative note today, with the Nigerian Stock Exchange All Share Index (NSE ASI) shedding ca -1.18% day-on-day to close at 29,614.61pts, and market’s year-to-date returns at -5.78%. This was due to losses in Zenith Bank Plc (-1.01%), Dangote Cement Plc (-1.63%) and Guaranty Trust Bank Plc (-6.99%).
The NSE Banking, Industrial and Consumer goods indices shed ca -305bps, -173bps and -17bps respectively, while the NSE Oil & Gas index gained ca +47bps. Transcorp Nigeria Plc led the volume chart with 21.86m, while Guaranty Trust Bank Plc led the value chart with ₦232.58mn worth of trades.
The Naira remained flat against the dollar in the interbank and parallel markets at ₦306.90/$1 and ₦361/$, respectively today. It also remained unchanged against the Pound sterling and the Euro at ₦463/₤1 and ₦408/€1 respectively. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate appreciated day-on-day at ₦360.42/$1 from ₦360.56/$1.
Crude oil prices trended down today, reversing earlier gains after market reacted positively to a trade truce between U.S and China as well as expectations of a continuation of production-cut deal by the Organisation of Petroleum Exporting Countries (OPEC) beyond June 2019. Brent crude oil price shed ca -0.48% day-on-day at $64.43pb, while WTI gained ca +0.12% day-on-day at $58.54pb, as at report time. Spot gold shed ca -1.72% at $1,389.10 per ounce, as investors embrace risk-on sentiments.
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| Benchmark T-Bills Discount Rates | ||||
| 01-Jul-19 | 28-Jun-19 | Change in Rates | ||
| 80 Days | 11.46% | 11.10% | 0.36% | |
| 171 Days- | 11.87% | 11.76% | 0.11% | |
| 346 Days. | 11.40% | 11.40% | 0.00% | |
| Source: FMDQ DQL for 01 July 2019 | ||||
| Benchmark FGN Bond Yields | ||||
| 01-Jul-19 | 28-Jun-19 | Change in Yield | ||
| 3 yrs: 16.00% 15-Jul-2021 | 13.51% | 13.78% | -0.27% | |
| 5 yrs: 15.54% 27-Apr 2023 | 14.15% | 14.27% | -0.12% | |
| 10 yrs: 13.98% 23-Feb 2028 | 14.25% | 14.29% | -0.04% | |
| 20 yrs: 16.25% 18-Apr 2037 | 14.48% | 14.48% | 0.00% | |
| Source: FMDQ DQL for 01 July 2019 | ||||
| Benchmark FGN EuroBond Yields | ||||
| 01-Jul-19 | 28-Jun-19 | Change in Yield | ||
| 3 yrs: NGERIA 6 3/4 01/28/21 | 3.81% | 3.96% | -0.15% | |
| 5 yrs: NGERIA 6 3/8 07/12/23 | 4.66% | 4.81% | -0.15% | |
| 10 yrs: NGERIA 6 1/2 11/28/27 | 6.32% | 6.51% | -0.19% | |
| 20 yrs: NGERIA 7.696 02/23/38 | 7.38% | 7.57% | -0.19% | |
| 30 yrs: NGERIA 9.248 01/21/49 | 7.91% | 8.09% | -0.18% | |
| Source: FMDQ DQL for 01 July 2019 | ||||
| AIICO Money Market Fund (AMMF) | |
| Net Yield (As at current date) | 13.20% per annum |
| Added Benefit | Personal accident insurance cover |
| AIICO Capital Guaranteed Income Note (GIN) Rates p.a. | |||||
| Amount (NGN) | 30 Days | 60 Days | 90 Days | 180 Days | 364 Days |
| 10,000,001 – 50,000,000 | 10.00 | 10.50 | 11.00 | 12.00 | 13.00 |
| 50,000,001 – 100,000,000 | 11.00 | 11.25 | 11.50 | 12.50 | 14.00 |
| 100,000,001 – 400,000,000 | 12.00 | 12.25 | 12.50 | 13.00 | 14.50 |
| Trading Treasury Bills Rates p.a. | |||
| Maturity Dates | Tenor (Days) | Discount Rate | Effective Yield |
| 29-Aug-19 | 59 | 10.60% | 10.78% |
| 17-Oct-19 | 108 | 10.95% | 11.32% |
| 07-Nov-19 | 129 | 11.35% | 11.82% |
| 16-Jan-20 | 199 | 11.45% | 12.21% |
| Select Macro-economic Indices | |
| Inflation % (May 2019) | 11.40 (+0.26% ytd) |
| PMI (June 2019) | 57.40 |
| MPR (%) | 13.5 (-5%/+2% around mid-point) |
| CRR (%) | 22.5 |
| Brent Crude Price US$ pbbl | 64.83 (+0.14% d/d) |
| External Reserve (US$’billion) | 45.069 (+1.41% ytd) |
| GDP % (Q1 2019) | +2.01% (Q4 2018: +2.38% y/y) |
| NSE All Share Index (ASI) | 29,614.61 (-1.18% d/d; -5.78% ytd) |
| Market Capitalisation (₦’Trillion) | 13.05 |
Financial Markets Update – 01 JULY 2019
Important Disclaimers
This document has been issued and approved by AIICO Capital and is based on information from various sources that we believe are reliable. However, no representation is made that it is accurate or complete. While reasonable care has been taken in preparing this document, no responsibility or liability is accepted for errors or fact or for any opinion expressed herein. This document is for information purposes only. It does not constitute any offer or solicitation to any person to enter into any trading transaction.
Investments discussed in this report may not be suitable for all investors. This report is provided solely for the information of AIICO Capital clients who are then expected to make their own investment decisions. AIICO Capital conducts designated investment business with market counter parties and customers and this document is directed only to such persons. AIICO Capital accepts no liability whatsoever for any direct or consequential loss arising from any use of this report or its contents. This report is for private circulation only and may not be reproduced, distributed or published by any recipient for any purpose without prior express consent of AIICO Capital. Users of this report should bear in mind that investments can fluctuate in price and value. Past performance is not necessarily a guide to future performance.
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