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.
Liquidity in the banking system opened negative today, at ca -₦132.23bn. There was no Open Market Operations (OMO) auction by the Central Bank of Nigeria (CBN) today.
A relatively more active trading day in the treasury bills secondary market, with demand seen at the mid-to-long end of the curve. Average rate dropped ca -20ps day-on-day, with the 06 June 2019 maturity trading the most to close at 11.16% from 12.33%. Please find below the results of the Primary Market Auction (PMA) held today:
|Amount Offered:||₦ 5.849 billion||₦ 26.600 billion||₦ 193.000 billion|
|Subscription:||₦ 17.548 billion||₦ 35.673 billion||₦ 200.393 billion|
|Amount Allotted:||₦ 5.849 billion||₦ 26.600 billion||₦ 119.549 billion|
|Range of bids:||10.7000% – 13.0000%||12.0000% – 15.0000%||14.0000% – 16.0000%|
Open Buy Back (OBB) and Overnight (O/N) rates dropped to 18.47% and 19.75% from 21.67% and 24.17% 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 7.50% for 30 – 60 days tenor on ₦10mln – ₦100mln.
A relatively quiet trading day in the bonds secondary market today, as investors uncertainty of government’s borrowing plan drove market activities. Average yields remained stable day-on-day, with the March 2027 maturity trading the most to close at 15.08%.
The Nigerian equities market appreciated for a 5th consecutive trading day, supported mainly by gains in Dangote Cement Plc (+4.44%). The Nigerian Stock Exchange All Share Index (NSE ASI) gained ca +1.07% day-on-day to close at 30,460.68pts, with market’s year-to-date returns at -3.09%.
The NSE Industrial and Consumer Goods indices both gained ca +170bps and +24bps respectively, while the NSE Banking and Oil & Gas indices both lost ca -68bps and -1bps respectively. Diamond Bank Plc led the volume chart with 141.23m units while Guaranty Trust Bank Plc led the value chart with trades worth ₦576.52mn.
The Naira appreciated against the dollar at the interbank market window today, at ₦306.36/$1 from ₦306.85/$1. In the parallel market, it remained stable against the Dollar and Pound Sterling at ₦362/$1 and ₦462/₤1 respectively, while appreciating against the Euro at ₦411/€1 from ₦412/€1. The Naira appreciated at the Nigerian Autonomous Foreign Exchange (NAFEX) window at ₦363.33/$1 from ₦363.91/$1.
Crude oil prices gained today, supported by China’s announcement of additional fiscal stimulus injection of ca $83 billion into its banking system. This comes as data from the Energy Information Administration (EIA) indicated record high weekly production from the U.S. at 11.9 million barrels per day. Brent crude oil price gained ca +1.10% at $61.32pb, while WTI crude gained ca +0.30% at $52.31pb, as at report time. Spot gold was down ca -0.17% day-on-day at $1,291.30 per ounce.
|AIICO Money Market Fund (AMMF)|
|Net Yield (As at current date)||12.98% per annum|
|Added Benefit||Personal accident insurance cover|
|AIICO Capital Guaranteed Income Note (GIN) Rates p.a.|
|Amount (NGN)||30 Days||60 Days||90 Days||180 Days||364 Days|
|10,000,001 – 50,000,000||10.00||10.50||11.00||12.00||13.00|
|50,000,001 – 100,000,000||11.00||11.25||11.50||12.50||14.00|
|100,000,001 – 400,000,000||12.00||12.25||12.50||13.00||14.50|
|Trading Treasury Bills Rates p.a.|
|Maturity Dates||Tenor (Days)||Discount Rate||Effective Yield|
|Select Macro-economic Indices|
|Inflation % (December 2018)||11.44 (-25.57% ytd)|
|PMI (December 2018)||61.10|
|MPR (%)||14 (-5%/+2% around mid-point)|
|Brent Crude Price US$ pbbl||61.32 (+1.10% d/d)|
|External Reserve (US$’bi l l ion)||43.05 (-0.16% ytd)|
|GDP % (Q3 2018)||+1.81% (Q2 2018: +1.50% y/y)|
|NSE Al l Share Index (ASI)||30,460.68 (+1.07% d/d; -3.09% ytd)|
|Market Capi tal i s ati on (₦’Tri l l i on)||11.36|