Financial Markets Today
Yield levels on government treasuries in Developed Economies crashed to new multi-year lows today, with the U.S. 10yr and 30yr treasuries dropping to their lowest since November 2017 at ca +1.976% and +2.505% respectively, while the 10yr German treasury trading at its historical low at ca -0.365%, with the 10yr UK and 10yr French treasuries also dropping to ca +0.721% and -0.0556% respectively. This comes on the back of increasing U.S./European Union (EU) trade tensions as the U.S. threatened the imposition of new tariffs on ca $4 billion worth of imports from the EU with possible counter imposition of tariffs by the EU on imports from the U.S.
We expect current uncertainties of global economic growth to persist in the near term on increasing risk-off sentiments and preference by investors for safe-haven risk assets of government treasuries of Developed Economies (EMs).
MONEY MARKETS
CAPITAL MARKETS
FOREIGN EXCHANGE
COMMODITIES
Banking system liquidity opened positive today at ca ₦477.30bn slightly lower than ₦485.60bn yesterday, this is despite the Central Bank of Nigeria (CBN) selling a total of ₦400bn at yesterday’s Open Market Operation (OMO) auction.
Treasury Bills
Mixed sentiments in the treasury bills secondary market, as market opened lower due to positive interbank liquidity and ca ₦363bn unfilled subscription at yesterday’s Open Market Operation (OMO) auction. However, market saw a reversal of rates after the Central Bank (CBN) announced an OMO auction. Some demand was later seen, particularly at the short end of the curve with today’s OMO auction closing with no sale by the CBN. The 3rd October 2019 and the 2nd January 2020 maturities which will be on offer at tomorrow’s Primary Market Auction (PMA) both saw improved demand, closing at 10.48% and 11.42% from 11.52% and 11.98% respectively. Kindly find below our expectations for tomorrow’s PMA:
| S/N | AUCTION DATE | TENOR | AMOUNT OFFERED (NGN) |
LAST STOP RATE | EXPECTED STOP RATE RANGE |
| 1 | 3-Jul-19 | 91-Day | 10,000,000,000.00 | 9.6000% | 9.35%-9.60% |
| 2 | 03-Jul-19 | 182-Day | 20,000,000,000.00 | 11.8900% | 11.55%-11.80% |
| 3 | 03-Jul-19 | 364-Day | 58,857,012,000.00 | 12.0200% | 11.85%-12.05% |
Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates marginally traded lower day-on-day at 6.57% and 7.21% from 8.14% and 8.93%. 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
Demand persisted in the bonds secondary market today, as market continues to see interest at the short-to-mid end of the curve. Average yields marginally shed ca -1bps day-on-day with the July 2021 paper closing at 13.10% from 13.51%.
Eurobond
Slightly bearish sentiments in the nation’s Eurobonds market today, with some profit taking on select maturities. Average yields gained ca +3bps day-on-day, with the 2049 paper closing at 7.95% from 7.91%.
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 -0.74% day-on-day to close at 29,395.14pts, and market’s year-to-date returns at -6.48%. This was due to losses in Guaranty Trust Bank Plc (-1.96%), Zenith Bank Plc (-0.77%) and Dangote Cement Plc (-0.61%).
The NSE Banking, Oil & Gas and Consumer goods indices shed ca -90bps, -99bps and -214bps respectively, while the NSE Industrial index gained ca +82bps. Guaranty Trust Bank Plc led both the volume and value charts with 24.43m units and ₦742.15mn worth of trades.
No change for the Naira against the dollar in the interbank and parallel markets at ₦306.90/$1 and ₦361/$, respectively today. The parallel market also remained flat with 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 ₦360.35/$1 from ₦360.42/$1.
Crude oil prices plunged today, on increasing global economic growth concerns, despite the announcement by the Organisation of Petroleum Exporting Countries (OPEC) and its allies to maintain current production-cut deal till March 2020. Brent crude oil price shed ca -4.01% day-on-day at $62.45pb, while WTI shed ca -4.74% day-on-day at $56.29pb, as at report time. Spot gold reversed yesterday’s losses, gaining ca +1.52% at $1,410.40 per ounce.
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| Benchmark T-Bills Discount Rates | ||||
| 02-Jul-19 | 01-Jul-19 | Change in Rates | ||
| 93 Days | 10.48% | 11.52% | -1.04% | |
| 184 Days- | 11.72% | 11.98% | -0.26% | |
| 345 Days. | 12.10% | 11.40% | 0.70% | |
| Source: FMDQ DQL for 02 July 2019 | ||||
| Benchmark FGN Bond Yields | ||||
| 02-Jul-19 | 01-Jul-19 | Change in Yield | ||
| 3 yrs: 16.00% 15-Jul-2021 | 13.10% | 13.51% | -0.41% | |
| 5 yrs: 15.54% 27-Apr 2023 | 14.41% | 14.15% | 0.26% | |
| 10 yrs: 13.98% 23-Feb 2028 | 14.38% | 14.25% | 0.13% | |
| 20 yrs: 16.25% 18-Apr 2037 | 14.53% | 14.48% | 0.05% | |
| Source: FMDQ DQL for 02 July 2019 | ||||
| Benchmark FGN EuroBond Yields | ||||
| 02-Jul-19 | 01-Jul-19 | Change in Yield | ||
| 3 yrs: NGERIA 6 3/4 01/28/21 | 3.89% | 3.81% | 0.08% | |
| 5 yrs: NGERIA 6 3/8 07/12/23 | 4.69% | 4.66% | 0.03% | |
| 10 yrs: NGERIA 6 1/2 11/28/27 | 6.34% | 6.32% | 0.02% | |
| 20 yrs: NGERIA 7.696 02/23/38 | 7.41% | 7.38% | 0.03% | |
| 30 yrs: NGERIA 9.248 01/21/49 | 7.95% | 7.91% | 0.04% | |
| Source: FMDQ DQL for 02 July 2019 | ||||
| AIICO Money Market Fund (AMMF) | |
| Net Yield (As at current date) | 13.19% 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 | 58 | 10.70% | 10.89% |
| 17-Oct-19 | 107 | 11.00% | 11.37% |
| 07-Nov-19 | 128 | 11.20% | 11.66% |
| 16-Jan-20 | 198 | 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 | 62.45 (-4.01% 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) | 29,395.14 (-0.74% d/d; -6.48% ytd) |
| Market Capitalisation (₦’Trillion) | 12.96 |
Financial Markets Update – 02 JULY 2019
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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.
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