Financial Markets Today
Prices of commodities rallied to new historical highs with price of gold trading at its highest in 6years at $1,450 per ounce today, on increased investors uncertainties of global economic growth and rising risk-off sentiments. This comes of the back of mixed comments by voting members of the U.S. Federal Reserve Bank (Fed), with the Boston Federal Reserve President indicating a preferred patient stance by the Fed heading into the next meeting on 30 July, in contrast to recent comments by other Fed members and general market expectation for a more accommodative policy stance and a rate cut.
With continued uncertainties of the size of expected negative impact of global trade tensions on the world’s largest economy – U.S., with its GDP growth rate data expected to be released next week Friday, we expect market prices of risk assets to remain highly volatile in the near term, on mixed sentiments of a possible rate cut by the U.S. Fed in July.
MONEY MARKETS
CAPITAL MARKETS
FOREIGN EXCHANGE
COMMODITIES
Liquidity in the banking system opened on a positive note today, at ca ₦382.65bn. The Central Bank of Nigeria (CBN) did not conduct an Open Market Operation (OMO) auction today.
Treasury Bills
The treasury bills secondary market traded bullish today, with demand seen particularly at the short-end of the curve. Average yields lost ca -35bps day-on-day with the 24 October 2019 maturity trading the most to close at 8.90% from 10.08%.
Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded higher day-on-day at 11.93% and 12.64% from 6.29% and 7.00%. 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
Yields trended lower in the bonds secondary market today, as investors sought to inflows from coupon payment. Average yields declined marginally by ca -1bps, with the April 2049 maturity trading the most to close at 14.1%.
Eurobond
Continued low level activities in the nation’s Eurobonds market today, with low interest shown for Nigerian sovereign papers. Average yields marginally dropped ca -1bps day-on-day with the January 2049 paper closing at 7.98% from 7.99%.
Equities
The Nigerian equities market closed the week on a positive note, with the Nigerian Stock Exchange All Share Index (NSE ASI) gaining ca +0.20% day-on-day to close at 27,919.50pts, and market’s year-to-date returns at -11.17%. This was due to gains in MTN Nigeria Plc (+0.79%) and Nigerian Breweries Plc (+1.72%).
The NSE Banking, Oil & Gas and Consumer goods indices gained ca +60bps, +75bps and +44bps respectively, while the Industrial index lost ca -145bps. FBN Holding Plc led the volume chart with ca 45.29m units while Nigeria Breweries Plc led the value chart with ca ₦777.80mn worth of trades.
The Naira traded flat day-on-day against the dollar in the interbank and parallel markets at ₦306.95/$1 and ₦360/$1 respectively. In the parallel market, it was appreciated against the Pound Sterling day-on-day at ₦461/₤1 from ₦462/₤1 while the Euro remained flat at ₦405/€1 respectively. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate appreciated day-on-day at ₦361.14/$1 from ₦361.23/$1.
Crude oil prices recovered slightly today, after Iranian government indicated it seized a British oil vessel within its international waters, further escalating tensions in the region. Brent crude oil price gained ca +1.71% day-on-day at $62.99pb, while WTI gained ca +1.21% day-on-day at $55.97pb, as at report time. Spot gold declined ca -0.10% at $1,426.70 per ounce.
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| Benchmark T-Bills Discount Rates | ||||
| 19-Jul-19 | 18-Jul-19 | Change in Rates | ||
| 84 Days | 8.91% | 9.91% | -1.00% | |
| 175 Days- | 10.20% | 10.59% | -0.39% | |
| 329 Days. | 11.10% | 11.10% | 0.00% | |
| Source: FMDQ DQL for 19 July 2019 | ||||
| Benchmark FGN Bond Yields | ||||
| 19-Jul-19 | 18-Jul-19 | Change in Yield | ||
| 3 yrs: 16.00% 15-Jul-2021 | 12.75% | 13.69% | -0.94% | |
| 5 yrs: 15.54% 27-Apr 2023 | 13.43% | 13.23% | 0.20% | |
| 10 yrs: 13.98% 23-Feb 2028 | 13.62% | 13.66% | -0.04% | |
| 20 yrs: 16.25% 18-Apr 2037 | 14.07% | 14.07% | 0.00% | |
| 30 yrs: 14.10% 26-Apr 2049 | 14.10% | 14.10% | 0.00% | |
| Source: FMDQ DQL for 19 July 2019 | ||||
| Benchmark FGN EuroBond Yields | ||||
| 19-Jul-19 | 18-Jul-19 | Change in Yield | ||
| 3 yrs: NGERIA 6 3/4 01/28/21 | 4.01% | 4.02% | -0.01% | |
| 5 yrs: NGERIA 6 3/8 07/12/23 | 4.61% | 4.66% | -0.03% | |
| 10 yrs: NGERIA 6 1/2 11/28/27 | 6.22% | 6.23% | -0.01% | |
| 20 yrs: NGERIA 7.696 02/23/38 | 7.46% | 7.46% | 0.00% | |
| 30 yrs: NGERIA 9.248 01/21/49 | 7.98% | 7.99% | -0.01% | |
| Source: FMDQ DQL for 19 July 2019 | ||||
| AIICO Money Market Fund (AMMF) | |
| Net Yield (As at current date) | 12.98% 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 | 41 | 9.55% | 9.65% |
| 17-Oct-19 | 90 | 8.50% | 8.68% |
| 07-Nov-19 | 111 | 9.55% | 9.84% |
| 16-Jan-20 | 181 | 9.80% | 10.30% |
| Select Macro-economic Indices | |
| Inflation % (June 2019) | 11.22 (-0.18% ytd) |
| PMI (June 2019) | 57.40 |
| MPR (%) | 13.5 (-5%/+2% around mid-point) |
| CRR (%) | 22.5 |
| Brent Crude Price US$ pbbl | 62.99 (+1.71% d/d) |
| External Reserve (US$’billion) | 45.094 (+1.39% ytd) |
| GDP % (Q1 2019) | +2.01% (Q4 2018: +2.38% y/y) |
| NSE All Share Index (ASI) | 27,919.50 (+0.20% d/d; -11.17% ytd) |
| Market Capitalisation (₦’Trillion) | 13.61 |
Financial Markets Update – 02 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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