Financial Markets Today

Financial Markets Today

Yields of U.S. treasuries dropped to their lowest since September 2017 today, with the 10yr U.S. treasury declining to ca +2.067% on the first trading day of June, from ca +2.133% on Friday. This can be attributed to increasing demand for Safe-haven risk assets of Developed Economies (DMs), rapidly rising global trade tensions and fears of a bigger slowdown in global economic growth. This also comes of the back of renewed dovish comments by a voting member of the Federal Open Market Committee (FOMC) of U.S. Federal Reserve Bank, indicating a rate cut could be justified to stimulate economic growth and weak inflation in the world’s largest economy on continued negative impact of current escalating trade tensions.

With increasing expectation for a possible sharper slowdown in economic growth in the U.S., of the back of rising trade tensions and increasing expectation of a bigger slowdown in global economic growth in 2019, we expect further rise in risk-off sentiments of Emerging Markets (EMs) and demand for safe-haven assets in the near term.

MONEY MARKETS

CAPITAL MARKETS

FOREIGN EXCHANGE

COMMODITIES

Liquidity in the banking system opened on a positive note today, at ca ₦510.06bn higher than ca ₦418.93bn recorded on Friday. The Central Bank of Nigeria (CBN) conducted an Open Market Operation (OMO) auction today to mop up the excess liquidity.

Treasury Bills
The treasury bills secondary market kicked off on a bearish note today, as market reacted to the Central Bank’s Open Market Operation (OMO) auction. Average rates gained ca +17bps day-on-day, with the 29 August 2019 maturity closing at 11.22% from 10.51%. Please find below details of the OMO auction:

Tenor 80-Days 178-Days 360-Days
Maturity Date: 22-Aug-19 28-Nov-19 28-May-20
Amount Offered: ₦20.000 billion ₦30.000 billion ₦150.000 billion
Subscription ₦4.180 billion ₦29.500 billion ₦319.720 billion
Amount Allotted: ₦3.180 billion ₦9.050 billion ₦305.710 billion
Range of bids 11.3500% – 11.6000% 11.4999% – 12.0000% 12.3000% – 12.8000%
Stop Rate 11.4000% 11.6400% 12.4800%

Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded higher day-on-day at 9.29% and 10.21% from 4.14% and 4.93%, with improved interbank liquidity. 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 secondary market kicked off on a quiet note today, with very few transactions across the curve. Average yields gained ca +3bps day-on-day, with April 2037 maturity closing at 14.54% from 14.51%.

Eurobond

The nation’s Eurobonds market traded bearish today with sell offs across the curve, on rising risk-off sentiments on emerging market risk assets. Average yields rose ca +6bps day-on-day with the January 2049 maturity closing at 8.98% from 8.94%.

Equities
The Nigerian equities market commenced the week negative today, with the Nigerian Stock Exchange All Share Index (NSE ASI) shedding ca -0.45% day-on-day to close at 30,928.29pts, with the market’s year-to-date returns at -1.60%. This was largely due to losses in Seplat Petroleum Development Company Plc (-9.07%) and Guaranty Trust Bank Plc (-0.95%).

The NSE Banking, Consumer goods, Industrial and Oil & Gas all lost ca -31bps, -39bps, -12bps and -574bps respectively. First City Monument Bank (FCMB) Plc led the volume chart with 70.56m while Guaranty Trust Bank Plc led the value chart with trades worth ca ₦1.07bn.

The Naira remained flat against the dollar in both the interbank and parallel markets at ₦306.90/$1 and ₦361/$1 respectively. It also remained stable against the Euro at ₦402/€1 and the Pound sterling at ₦465/₤1, in the parallel market. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate appreciated day-on-day at ₦360.39/$1 from ₦360.43/$1

Crude oil prices fell further today, despite OPEC and its allies stating their commitment to manage global crude supply to avoid a glut, as concerns on global economic growth due to U.S./China trade tensions and U.S. sanctions on Mexico overshadow OPECs actions. Brent crude oil price lost ca -2.05% day-on-day at $60.72pb, while WTI shed ca -1.29% day-on-day at $52.81pb, as at report time. Spot gold gained ca +1.4339% at $1,329.80 per ounce.

Top 5 Equitiy Advancers
Name (Symbol) Closing Price Gain(N) % Change
CHAMPION 1.11 0.10 +9.90%
UPL 1.97 0.17 +9.44%
ACADEMY 0.27 0.02 +8.00%
STERLNBANK 2.40 0.10 +4.35%
JAIZBANK 0.48 0.02 +4.35%
Top 5 Equity Decliners
Name (Symbol) Closing Price Gain(N) % Change
GLAXOSMITH 7.65 -0.85 -10.00%
ETI 10.05 -1.10 -9.87%
JBERGER 19.70 -2.15 -9.84%
OANDO 3.80 -0.40 -9.52%
VITAFOAM 3.85 -0.40 -9.41%
Benchmark T-Bills Discount Rates
03-Jun-19 31-May-19 Change in Rates
91 Days                                      . 11.22% 10.51% 0.71%
182 Days- 11.45% 11.45% 0.00%
357 Days. 11.55% 11.55% 0.00%
Source: FMDQ DQL for 03 June 2019
*T-Bills Discount Rates are slightly different from current market rates
Benchmark FGN Bond Yields
03-Jun-19 31-May-19 Change in Yield
3 yrs: 16.00% 15-Jul-2021 14.26% 13.91% 0.35%
5 yrs: 15.54% 27-Apr 2023 14.33% 14.33% 0.00%
10 yrs: 13.98% 17 Mar 2027 14.26% 14.35% -0.09%
20 yrs: 16.25% 18-Apr 2037  . 14.54% 14.51% 0.03%
Source: FMDQ DQL for 03 June 2019
Benchmark FGN EuroBond Yields
03-Jun-19 31-May-19 Change in Yield
3 yrs: NGERIA 6 3/4 01/28/21 4.98% 4.94% 0.04%
5 yrs: NGERIA 6 3/8 07/12/23 5.75% 5.70% -0.05%
10 yrs: NGERIA 6 1/2 11/28/27 7.46% 7.37% 0.09%
20 yrs: NGERIA 7.696 02/23/38 8.42% 8.35% 0.07%
30 yrs: NGERIA 9.248 01/21/49 8.98% 8.94% 0.04%
Source: FMDQ DQL for 03 June 2019
AIICO Money Market Fund (AMMF)
Net Yield (As at current date) 13.23% 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
01-Aug-19 59 9.65% 9.80%
17-Oct-19 136 11.25% 11.74%
07-Nov-19 157 11.20% 11.77%
16-Jan-20 227 11.40% 12.27%
Select Macro-economic Indices
Inflation % (April 2019) 11.37 (+1.07% ytd)
PMI (May 2019) 57.80
MPR (%) 13.5 (-5%/+2% around mid-point)
CRR (%) 22.5
Brent Crude Price US$ pbbl 60.72 (-2.05% d/d)
External Reserve (US$’billion) 45.122 (+1.92% ytd)
GDP % (Q4 2018) +2.01% (Q4 2018: +2.38% y/y)
NSE All Share Index (ASI) 30,928.29 (-0.45% d/d; -1.60% ytd)
Market Capitalisation (₦’Trillion) 13.62

Financial Markets Update – 03 June 2019

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