Financial Markets Today

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.

Top 5 Equitiy Advancers
Name (Symbol) Closing Price Gain(N) % Change
TRANSEXPR 0.77 0.07 +10.00%
CILEASING 6.05 0.55 +10.00%
JAPAULOIL 0.22 0.02 +10.00%
BERGER 6.85 0.60 +9.60%
UNIONDAC 0.24 0.02 +9.09%
Top 5 Equity Decliners
Name (Symbol) Closing Price Gain(N) % Change
CONTINSURE 1.72 -0.19 -9.95%
AGLEVENT 0.29 -0.03 -9.38%
JAIZBANK 0.41 -0.03 -6.82%
VETGOODS 5.50 -0.33 -5.66%
CONOIL 18.60 -1.10 -5.58%
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

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.
AIICO Capital is regulated by the Securities and Exchange Commission, and is licensed to provide fund and portfolio management services in Nigeria