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.
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| 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 |
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| 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
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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