Financial Markets Today

Financial Markets Today

Good Evening,

All of us at AIICO Capital wish you all the Happiness in the New Year.

Nigeria’s crude oil output rose year-on-year by ca 6% in 2018 to an average of 2.09 million barrels per day (mbpd) vs 1.86 mbpd in 2017, data from the Nigerian National Petroleum Corporation (NNPC) indicated yesterday. This comes as the Organisation of Petroleum Exporting Countries (OPEC) and Russia commenced the implementation of its production cut agreement, aiming to reduce global production by ca 1.4 mbpd from 01 January 2019, with Nigeria’s output set to be limited to ca 1.68 mbpd.

With the implementation of crude oil production cap on Nigeria at 1.69 mbpd, significantly below 2019 projected budget basis of 2.3 mbpd and Brent crude oil expected range of ca $50 – $65 per barrel, we expect some revenue challenges for the government in 2019. We do not expect the implementation of the production cut agreement to sufficiently support a significant rise in Brent crude oil price in 2019, on escalating fears a global economic slowdown, expected lower crude oil demand and rising investors demand for safe-haven treasuries of developed economies due to rising global uncertainties.

 

MONEY MARKETS

CAPITAL MARKETS

FOREIGN EXCHANGE

COMMODITIES

Banking system liquidity was expected to open positive today, with ca ₦499bn expected inflow from maturing Open Market Treasury (OMO) treasury bills. In line with the Central Bank of Nigeria (CBN)’s tight monetary stance, there was an OMO auction and a Special OMO sale today.

Treasury Bills
A relatively quiet trading day in the treasury bills secondary market today, with only a few trades seen across the curve. Average rate gained ca +11bps day-on-day, with the 21 March 2019 maturity trading the most to close at 13.14% from 12.25%. Please find below a summary of the results of the Open Market Operations (OMO) auction and Special OMO sale held today:

Tenor 91-Days 182-Days 364-Days
Maturity Date: 04-Apr-19 04-Jul-19 02-Jan-20
Amount Offered: ₦ 50.00 billion 100.00 billion 300.00 billion
Subscription: ₦ 27.78 billion 43.01 billion 170.79 billion
Amount Allotted: ₦ 27.78 billion 43.01 billion 170.79 billion
Range of bids: 11.8500% – 11.9000% 13.4000% – 15.0000% 15.0000% – 15.0000%
Stop Rates 11.9000% 13.5000% 15.0000%
346-Days Special OMO
02-Jan-20
184.08 billion
15.0000%

 

Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates dropped to 14.08% and 14.92% from 18.33% and 19.42% 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 8.00% for 30 – 60 days tenor on ₦10mln – ₦100mln.

Bonds
A relatively more active day in the bond secondary market today, with activities seen at the short-to-mid end of the curve. Average yields gained ca +4bps day-on-day, with the February 2028 maturity trading the most to close at 15.67% from 15.57%.

Equities
The Nigerian equities market declined further today, as the Nigerian Stock Exchange All Share Index (NSE ASI) lost ca -0.96% day-on-day to close at 30,771.32pts, with market’s year-to-date returns at -2.10%. This was mainly due to price depreciation in Guaranty Trust Bank Plc (-4.49%), Zenith Bank Plc (-1.52%) and Stanbic IBTC Holding Plc (-4.07%). The NSE Industrial, Consumer Goods, and Banking indices lost ca -283bps, -2bps and -215bps respectively, while NSE Oil & Gas gained ca +64bps. Diamond Bank Plc led the volume chart with 51.95m units while Guaranty Trust Bank Plc led the value chart with ₦171.94mn worth of trades.

The Naira remained stable against the dollar at the interbank market window today, at ₦306.95/$1. In the parallel market, it remained stable against the Dollar at ₦362/$1, while it depreciated against Pound Sterling and Euro at ₦460/₤1 and ₦410/€1 from ₦455/₤1 and ₦409/€1, respectively. The Naira appreciated at the Nigerian Autonomous Foreign Exchange (NAFEX) window at ₦364.50/$1 from ₦364.59/$1..

Crude oil prices gained today, on the back of reports of the implementation of crude oil output cut by Saudi Arabia, despite growing concerns of global economic slowdown in 2019. Brent crude oil price gained +0.87% at $55.39pb, while WTI crude was up ca +0.21% at $46.64pb, as at report time. Spot gold rose to a 6-months high, gaining ca +0.55% day-on-day at $1,291.20 per ounce.

 

Top 5 Equitiy Advancers
Name (Symbol) Closing Price Gain(N) % Change
FO 30.70 2.70 +9.64%
UBN 6.05 0.45 +8.04%
TRANSEXPR 0.70 0.05 +7.69%
JBERGER 23.25 1.15 +5.20%
JAIZBANK 0.54 0.02 +3.85%
Top 5 Equity Decliners
Name (Symbol) Closing Price Gain(N) % Change
GLAXOSMITH 13.05 -1.45 -10.00%
UPL 1.97 -0.21 -9.63%
MCNICHOLS 0.43 -0.04 -5.51%
FCMB 1.65 -0.15 -8.33%
FIRSTALUM 0.33 -0.03 -8.33%
Benchmark T-Bills Discount Rates
03-Jan-19 02-Jan-19 Change in Rates
77 Days 13.14% 12.25% 0.89%
147 Days 13.42% 13.42% 0.00%
322 Days 14.78% 14.78% 0.00%
Source: FMDQ DQL for 03 January 2019
*T-Bills Discount Rates are slightly different from current market rates
Benchmark FGN Bond Yields
03-Jan-19 02-Jan-19 Change in Yield
3 yrs: 16.00% 29-Jun 2019 13.60% 13.42% 0.18%
5 yrs: 15.54% 13-Feb 2020 15.53% 15.47% 0.06%
10 yrs: 16.29% 17 Mar 2027 15.53% 15.64% -0.11%
20 yrs: 16.25% 18-Apr 2037 15.54% 15.54% 0.00%
Source: FMDQ DQL for 03 January 2019
AIICO Money Market Fund (AMMF)
Net Yield (As at current date) 13.13% 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
17-Jan-19 13 14.70% 14.78%
14-Feb-19 41 14.20% 14.43%
21-Mar-19 76 12.45% 12.78%
07-Nov-19 307 14.35% 16.32%

 

Select Macro-economic Indices
Inflation % (November 2018) 11.28 (2018, -26.61% ytd)
PMI (December 2018) 61.10
MPR (%) 14 (-5/+2 around mid-point)
CRR (%) 22.5
Brent Crude Price US$ pbbl 55.39 (+0.87% d/d)
External Reserve (US$’billion) 43.19 (2018, +11.40% ytd)
GDP % (Q3 2018) +1.81% (Q2 2018: +1.50% y/y)
NSE All Share Index (ASI) 30,771.32 (-0.96% d/d; -2.10% ytd)
Market Capitalisation (₦’Trillion) 11.47