Financial Markets Today
Global equity markets declined today with the Dow Jones Industrial Average (DJIA), S&P 500, NASDAQ, German DAX, UK FTSE, French CAC, Japanese NIKKEI AND Chinese Shanghai indices all losing ca -0.82%, -0.77%, -1.43%, -3.11%, -2.34%, -3.57%, -2.11% and -1.41% day-on-day. This comes on further escalation of global trade tensions between the world’s largest economies of the back of announcement by the Chinese government of reprisal attacks should the U.S. implement its announced 10% tariff on Chinese imports, with the U.S President – Donald Trump’s announcement of the possibility to raise previously announced 10% to 25%.
We expect continued rise in risk-off sentiments in the near term, with investors showing preference for government treasuries of Developed Economies (DMs) and Gold. We also expect the yield on treasury instruments of DMs to remain depress in the near term as investors maintain a cautious outlook to risk-assets.
MONEY MARKETS
CAPITAL MARKETS
FOREIGN EXCHANGE
COMMODITIES
Amount of money in the Nigerian interbank system was expected to open lower but positive today, on the back of the Bi-weekly retail FX auction conducted by CBN. The Central Bank of Nigeria (CBN) did not conduct an Open Market Operation (OMO) auction today.
Treasury Bills
Activities in the treasury bills secondary market closed the day on a slightly bullish note, with demand on select maturities. Most of today’s activities was on short-to-mid dated papers as average rates lost ca -4bps with the 28 May 2020 maturity closing at 10.80% from 10.83%.
Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded higher day-on-day to close the day at 5.64% and 6.43% from 2.50% and 3.21% respectively, as banks funded for the CBN Retail FX intervention today . 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 market ended the week on a quiet note today, as market players traded with caution. Average yields trended downwards due to some demand for papers at the long end, marginally shedding ca -1ps day-on-day, as the April 2049 maturity closed at 14.06% from 14.07%.
Eurobond
The nation’s Eurobond market closed on a bearish note today, with sell-offs seen across the curve, as Investors continue to react to escalating trade tensions and potential risk-off sentiments on Emerging (EM) and Frontier Markets (FM) after Chinese announcement of its readiness to retaliate if the U.S. does implement the previously announced 10% tariff on Chinese imports. Average yields gained ca +9bps day-on-day with the January 2049 maturity closing at 8.15% from 8.08%.
Equities
The Nigerian equities market closed the week on a negative note today, as the Nigerian Stock Exchange All Share Index (NSE ASI) shed ca -0.43% day-on-day to close at 27,630.46pts, and market’s year-to-date returns at -12.09%. This was mainly due to losses in MTN Nigeria Plc (-1.59%) and Stanbic Bank Plc (-0.26%).
The NSE Oil & Gas and Industrial indices gained ca +92bps and ca +2bps respectively, while the NSE Banking Index was the solo loser with ca -56bps. However, the NSE Consumer Goods Index closed the day on a flat note. MTN Nigeria Plc led the volume chart with ca 25.37m units and the value chart with ca ₦3.22bn worth of trades.
The Naira remained stable against the dollar day-on-day in the interbank market to close at ₦306.85/$1 while in the parallel markets, it appreciated against the dollar day-on-day to close at ₦359/$1 from ₦360/$1 respectively. In the parallel market, it appreciated against the Pound Sterling day-on-day to close at ₦450/₤1 from ₦452/₤1, while against the Euro, it remained flat day-on-day to close at ₦398/€1. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate appreciated day-on-day at ₦361.93/$1 from ₦362.11/$1.
Crude oil prices gained today, recovering from initial losses of yesterday, as market continues to react to the announcement of further sanctions on China by the U.S. as the trade disputes linger. Brent crude oil price gained ca +2.64% day-on-day at $62.10pb, while WTI gained ca +3.32% day-on-day at $55.71pb, as at report time. Spot gold gained ca +1.58% at $1,454.70 per ounce.
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| Benchmark T-Bills Discount Rates | ||||
| 02-Aug-19 | 01-Aug-19 | Change in Rates | ||
| 90 Days | 9.86% | 9.82% | 0.04% | |
| 174 Days | 10.57% | 10.68% | -0.11% | |
| 351 Days | 10.67% | 10.67% | 0.00% | |
| Source: FMDQ DQL for 02 Aug 2019 | ||||
| Benchmark FGN Bond Yields | ||||
| 02-Aug-19 | 01-Aug-19 | Change in Yield | ||
| 3 yrs: 16.00% 15-Jul-2021 | 12.97% | 12.97% | 0.00% | |
| 5 yrs: 15.54% 27-Apr 2023 | 12.85% | 13.46% | -0.61% | |
| 10 yrs: 13.98% 23-Feb 2028 | 13.63% | 13.59% | 0.04% | |
| 20 yrs: 16.25% 18-Apr 2037 | 13.78% | 13.78% | 0.00% | |
| 30 yrs: 14.80% 26-Apr 2049 | 14.06% | 14.07% | -0.01% | |
| Source: FMDQ DQL for 02 Aug 2019 | ||||
| Benchmark FGN EuroBond Yields | ||||
| 02-Aug-19 | 01-Aug-19 | Change in Yield | ||
| 3 yrs: NGERIA 6 3/4 01/28/21 | 4.25% | 4.13% | 0.12% | |
| 5 yrs: NGERIA 6 3/8 07/12/23 | 4.76% | 4.66% | 0.10% | |
| 10 yrs: NGERIA 6 1/2 11/28/27 | 6.32% | 6.23% | 0.09% | |
| 20 yrs: NGERIA 7.696 02/23/38 | 7.55% | 7.48% | 0.07% | |
| 30 yrs: NGERIA 9.248 01/21/49 | 8.15% | 8.08% | 0.07% | |
| Source: FMDQ DQL for 02 Aug 2019 | ||||
| AIICO Money Market Fund (AMMF) | |
| Net Yield (As at current date) | 12.62% 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 |
| 24-Oct-19 | 83 | 10.63% | 10.89% |
| 31-Oct-19 | 90 | 9.86% | 10.11% |
| 16-Jan-20 | 167 | 10.88% | 11.45% |
| 28-May-20 | 300 | 10.80% | 11.85% |
| Select Macro-economic Indices | |
| Inflation % (June 2019) | 11.22 (-0.18% ytd) |
| PMI (July 2019) | 57.60 |
| MPR (%) | 13.5 (-5%/+2% around mid-point) |
| CRR (%) | 22.5 |
| Brent Crude Price US$ pbbl | 62.10 (-2.64% d/d) |
| External Reserve (US$’billion) | 44.923 (+1.33% ytd) |
| GDP % (Q1 2019) | +2.01% (Q4 2018: +2.38% y/y) |
| NSE All Share Index (ASI) | 27,630.46 (-0.43% d/d; -12.09 ytd) |
| Market Capitalisation (₦’Trillion) | 13.47 |
Financial Markets Update – 02 August 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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