Financial Markets Today
Yields of treasuries of Developed Economies (DMs) declined on Friday, on increased investors’ risk-on sentiments and higher expectation for a further interest rate cut by the U.S. Federal Reserve Bank at their next Federal Open Committee Meeting (FOMC), next week. The 10YR U.S. treasury, 10YR German treasury, 10YR UK treasury and 10YR French treasury all dropped to -+1.56%, -0.638%, +0.504%, -0.3407% respectively, on renewed investors’ demand, after release of weaker-than-expected U.S. jobs data at 130,000 jobs in August vs market analysts’ expectation of 150,000 jobs and lower than 164,000 in July. This also follows indications by the New York Federal Reserve Bank of the risk of a U.S. economic recession in the next 12 months rising to its highest level in 10 years at 39%.
With continued uncertainties of the possible actions by the FOMC of the U.S. Federal Reserve Bank, U.S./China trade negotiations uncertainties with the expected implementation of higher tariffs by the U.S. on ca $250billion of Chinese imports from 01 October, we expect investors to remain cautious on raising risk-on sentiments in the near term.
MONEY MARKETS
CAPITAL MARKETS
FOREIGN EXCHANGE
COMMODITIES
Amount of money in the banking system was expected to open positive on Friday. The Central Bank Nigeria (CBN) did not conduct an Open Market Operation (OMO) auction today.
Treasury Bills
The treasury bills secondary market ended the week on a bullish note on Friday, on the back of robust interbank liquidity. Demand was seen on some select maturities, particularly at the short-to-mid end of the curve. Average rates lost ca -40bps day-on-day with the 11 June 2020 maturity closing at 13.00% from 13.20%.
Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded lower day-on-day at 3.21% and 3.86% from 4.21% and 5.14% 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 domestic bonds secondary market ended the week on a bearish note on Friday, as yields inched up in reaction to the announcement of an OMO auction and expectation of stop yield levels above 15%. Average yields marginally gained +1bps day-on-day with the February 2028 maturity closing at 14.30% from 14.23%.
Eurobond
The nation’s Eurobonds market ended the week on a bearish note today due to profit taking activities and increased risk-off sentiments. Sell-offs was seen across the curve, as investors took profit on their portfolio holdings to close the week. Average yields gained ca +3bps day-on-day, with the January 2049 maturity closing at 8.03% from 8.00%.
Equities
The Nigerian equities market ended the week on a negative note, as the Nigerian Stock Exchange All Share Index (NSE ASI) lost ca -0.39% day-on-day to close at 27,146.57pts, with market’s year-to-date returns at -13.63%. This was mainly due to losses in Nestle Nigeria Plc (-3.60%), Dangote Cement Plc (-1.27%) and Guaranty Trust Bank Plc (-1.32%).
The NSE Oil & Gas and Banking indices gained ca +71bps and ca +54bps , while the NSE Consumer Goods and Industrial Goods indices lost ca -167bps and -54bps day-on-day respectively. Guaranty Trust Bank Plc led both the volume and value charts with ca 129.26m units traded at ca ₦3.40bn.
In the interbank market, the Naira remained appreciated against the dollar day-on-day to close at ₦306.90/$1 from at ₦306.95/$1 while it remained stable in the parallel market closing at ₦360/$1. In the parallel market, it also remained unchanged against the Pound Sterling to close at ₦447/₤1 while it appreciated against the Euro day-on-day to close at ₦397/₤1 and ₦398/€1. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate appreciated day-on-day to close at ₦361.97/$1 from ₦362.21/$1.
Crude oil prices rose further on Friday, as the U.S. Federal Reserve (Fed) Chairman – Jerome Powel, indicated the Fed could act to sustain economic growth in the U.S., with market analysts interpreting this as a possible signal for an interest rate cut ahead of the 17 – 18 September policy meeting of the Fed. Brent crude oil price gained ca +1.96% day-on-day at $61.54pb, while WTI gained ca +0.76% day-on-day at $56.73pb, as at report time. Spot gold shed ca -0.68% at $1,515.00 per ounce.
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| Benchmark T-Bills Discount Rates | ||||
| 06-Sept-19 | 05-Sept-19 | Change in Rates | ||
| 90 Days | 12.00% | 12.80% | -0.80% | |
| 174 Days | 12.28% | 12.89% | -0.61% | |
| 342 Days | 13.69% | 13.38% | 0.31% | |
| Source: FMDQ DQL for 06 Sept 2019 | ||||
| Benchmark FGN Bond Yields | ||||
| 06-Sept-19 | 05-Sept-19 | Change in Yield | ||
| 3 yrs: 16.00% 15-Jul-2021 | 14.42% | 14.00% | 0.42% | |
| 5 yrs: 15.54% 27-Apr 2023 | 14.50% | 14.41% | 0.09% | |
| 10 yrs: 13.98% 23-Feb 2028 | 14.30% | 14.23% | 0.07% | |
| 20 yrs: 16.25% 18-Apr 2037 | 14.51% | 14.30% | 0.21% | |
| 30 yrs: 14.80% 26-Apr 2049 | 14.56% | 14.56% | 0.00% | |
| Source: FMDQ DQL for 06 Sept 2019 | ||||
| Benchmark FGN EuroBond Yields | ||||
| 06-Sept-19 | 05-Sept-19 | Change in Yield | ||
| 3 yrs: NGERIA 6 3/4 01/28/21 | 4.09% | 4.01% | 0.08% | |
| 5 yrs: NGERIA 6 3/8 07/12/23 | 4.79% | 4.75% | 0.04% | |
| 10 yrs: NGERIA 6 1/2 11/28/27 | 6.24% | 6.22% | 0.02% | |
| 20 yrs: NGERIA 7.696 02/23/38 | 7.34% | 7.30% | 0.04% | |
| 30 yrs: NGERIA 9.248 01/21/49 | 8.03% | 8.00% | 0.03% | |
| Source: FMDQ DQL for 06 Sept 2019 | ||||
| AIICO Money Market Fund (AMMF) | |
| Net Yield (As at current date) | 12.14% 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 |
| 31-Oct-19 | 56 | 12.20% | 12.43% |
| 16-Jan-20 | 133 | 12.25% | 12.82% |
| 28-May-20 | 266 | 12.60% | 13.87% |
| 18-Jun-20 | 287 | 12.50% | 13.86% |
| Select Macro-economic Indices | |
| Inflation % (July 2019) | 11.08 (-2.55% ytd) |
| PMI (August 2019) | 57.90 |
| MPR (%) | 13.5 (-5%/+2% around mid-point) |
| CRR (%) | 22.5 |
| Brent Crude Price US$ pbbl | 61.54 (+1.96% d/d) |
| External Reserve (US$’billion) | 43.144 (+1.36% ytd) |
| GDP % (Q2 2019) | +1.94% (Q1 2019: +2.10% y/y) |
| NSE All Share Index (ASI) | 27,146.57 (-0.39% d/d; -13.63 ytd) |
| Market Capitalisation (₦’Trillion) | 13.21 |
Financial Markets Update – 06 SEPTEMBER 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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