Financial Markets Today

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.

MONEY MARKETS

CAPITAL MARKETS

FOREIGN EXCHANGE

COMMODITIES

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.

Treasury Bills
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:

Tenor 91-Days 182-Days 364-Days
Maturity Date: 18-Apr-19 18-Jul-19 16-Jan-20
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%
Stop Rates 11.0000% 13.1000% 15.0000%

 

Bank Placements
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.

Bonds
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%.

Equities
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.

Top 5 Equitiy Advancers
Name (Symbol) Closing Price Gain(N) % Change
SOVRENINS 0.22 0.02 +10.00%
VERITASKAP 0.22 0.02 +10.00%
GUINNESS 71.00 6.25 +9.65%
NEM 2.06 0.18 +9.57%
HONYFLOUR 1.26 0.11 +9.57%
Top 5 Equity Decliners
Name (Symbol) Closing Price Gain(N) % Change
BETAGLAS 60.30 -6.70 -10.00%
NNFM 3.95 -0.40 -9.20%
RESORTSAL 0.31 -0.03 -8.82%
PZ 11.00 -1.00 -8.33%
NEIMETH 0.61 -0.03 -4.69%
Benchmark T-Bills Discount Rates
16-Jan-19 15-Jan-19 Change in Rates
78 Days 13.78% 13.74% 0.04%
148 Days 13.46% 13.66% -0.20%
330 Days 14.49% 14.49% 0.00%
Source: FMDQ DQL for 16 January 2019
*T-Bills Discount Rates are slightly different from current market rates
Benchmark FGN Bond Yields
16-Jan-19 15-Jan-19 Change in Yield
3 yrs: 16.00% 29-Jun 2019 14.17% 14.39% -0.22%
5 yrs: 15.54% 13-Feb 2020 15.27% 15.52% 0.08%
10 yrs: 16.29% 17 Mar 2027 15.08% 15.17% -0.09%
20 yrs: 16.25% 18-Apr 2037 15.15% 15.18% -0.03%
Source: FMDQ DQL for 16 January 2019
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
31-Jan-19 15 14.30% 14.38%
14-Feb-19 29 13.15% 13.29%
21-Mar-19 64 13.05% 13.36%
07-Nov-19 295 14.35% 16.23%

 

Select Macro-economic Indices
Inflation % (December 2018) 11.44 (-25.57% ytd)
PMI (December 2018) 61.10
MPR (%) 14 (-5%/+2% around mid-point)
CRR (%) 22.5
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

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