Financial Markets Today

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

The Chinese government today announced the injection of ca $83 billion into its banking system, its largest 1-day injection in its history in its continued efforts at stabilizing and boosting economic activities in the world’s 2nd largest economy. This is in addition to the reduction in its Reserve Requirement Ration (RRR) for its banks of 100bps last week and comes in reaction to Monday’s import and export data from China which indicated continued weakening in economic activities, further heightening investors’ fears of a global economic slowdown in 2019, and increasing drive for safe-haven investments as yields on treasury bonds in developed economies dropped day-on-day. Yields on the 10yr Treasury bonds in the U.S., Germany and Japan all declined to +2.715%, +0.222% and +0.002% respectively.

Nigeria’s annual inflation for December 2018 rose by 0.16% month-on-month as headline inflation rose to 11.44% year-on-year (y/y) vs 11.28% (y/y) recorded for November 2018. This can be attributed to the continued rise in the Food sub-index which rose to 13.56% (y/y) vs 13.30% (y/y) in November, while the All items less farm produce sub-index remained stable month-on-month at 9.80% y/y.

We expect further introduction of additional stimulus in the world’s 2nd largest economy – China, to further stabilize its economic activities after consecutive quarters of slowdown in Q1 – Q3 2018 on negative impact of trade wars with the U.S. and on increasing expectation of a global economic slowdown in 2019.

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