Financial Markets Today
All of us at AIICO Capital wish you all the Happiness in the New Year.
Global crude oil prices rallied today, with Brent crude oil price rising above $60 per barrel during trade, after gaining ca +2.5% day-onday. This comes as the Chinese National Development and Reform Commission, indicated plans to implement additional fiscal stimulus in the near term, in an attempt to stabilize and boost economic activities in the world’s 2nd largest economy and largest crude oil consumer, and comes in reaction to yesterday’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.
With increasing expectation of a global economic slowdown in 2019, led by an expected economic slowdown in China, we expect a rise in the number of fiscal stimulus to be implemented by the Chinese government in Q1 2018, particularly on a rise in uncertainties of the U.S./China trade negotiations.
MONEY MARKETS
CAPITAL MARKETS
FOREIGN EXCHANGE
COMMODITIES
Banking system liquidity opened on a negative note today, at ca -₦134.46bn. The Central Bank of Nigeria (CBN) also conducted an Open Market Operations (OMO) today to further tighten system liquidity, in line with its current tight monetary stance.
Treasury Bills
Another relatively quiet trading day in the treasury bills secondary market, with average rate gaining ca +7bps day-on-day, with the 07 March 2019 maturity trading the most to close at 13.95%. Please find below the results of the Open Market Operations (OMO) auction held today:
| Tenor | 100-Days | 163-Days | 317-Days |
| Maturity Date: | 25-Apr-19 | 27-Jun-19 | 28-Nov-19 |
| Amount Offered: | ₦ 20.00 billion | ₦ 30.00 billion | ₦ 50.00 billion |
| Subscription: | ₦ 0.0028 billion | ₦ 0.5086 billion | ₦ 22.00 billion |
| Amount Allotted: | ₦ 0.0028 billion | ₦ 0.5086 billion | ₦ 22.00 billion |
| Range of bids: | 11.9000% – 11.9000% | 13.5000% – 15.0000% | 15.0000% – 15.0000% |
| Stop Rates | 11.9000% | 13.5000% | 15.0000% |
Also, there will be a primary market auction of treasury bills tomorrow, with ca ₦225.449 billion of maturing treasury bills being rolled over. Please find below our expectation of stop rates at the auction:
| S/N | AUCTION DATE | TENOR | OFFER AMOUNT(NGN) | LAST STOP RATE | EXPECTED STOP RATE RANGE |
| 1 | 28-Nov-18 | 91-Day | 5,849,034,000.00 | 10.90% | 10.85% – 11.05% |
| 2 | 28-Nov-18 | 182-Day | 26,600,000,000.00 | 13.10% | 13.05% – 13.30% |
| 3 | 28-Nov-18 | 364-Day | 193,000,000,000.00 | 14.50% | 14.30% – 14.55% |
Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates dropped to 21.67% and 24.17% from 31.67% and 35.25%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
Yields dropped across all maturities in the bonds secondary market today, as investors anticipate the release of the Q1 2019 bonds primary auction calendar. Average yields dropped ca -15bps day-on-day, with the March 2027 maturity trading the most to close at 15.17%.
Equities
The Nigerian equities market appreciated for a 4th consecutive trading day, as the Nigerian Stock Exchange All Share Index (NSE ASI) gained ca +0.58% day-on-day to close at 30,137.53pts, with market’s year-to-date returns at -4.11%. This was due to price appreciation in Zenith Bank Plc (+0.69%) and Stanbic IBTC Holding Plc (+2.93%).
The NSE Banking, Industrial, Consumer Goods and Oil and Gas indices all gained ca +34bps, +311bps, +22bps and +28bps, respectively. Diamond Bank Plc led the volume chart with 100.67m units while Guaranty Trust Bank Plc led the value chart with trades worth ₦1.318bn.
The Naira remained stable against the dollar at the interbank market window today, at ₦306.85/$1. In the parallel market, it remained stable against the Dollar, Pound Sterling and Euro at ₦362/$1, ₦462/₤1 and ₦412/€1, respectively. The Naira appreciated at the Nigerian Autonomous Foreign Exchange (NAFEX) window at ₦363.91/$1 from ₦364.41/$1.
Crude oil prices appreciated today, supported by China’s plans to introduce additional economic stimulus to stabilize and possibly boost economic activities in the world’s largest crude oil consumer expected and 2nd largest global economy. Brent crude oil price gained ca +2.75% at $60.61pb, while WTI crude gained ca +3.15% at $52.10pb, as at report time. Spot gold was down ca -0.18% day-on-day at $1,289.00 per ounce.
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| AIICO Money Market Fund (AMMF) | |
| Net Yield (As at current date) | 12.98% per annum |
| Added Benefit | Personal accident insurance cover |
| AIICO Capital Guaranteed Income Note (GIN) Rates p.a. | |||||
| Amount (NGN) | 30 Days | 60 Days | 90 Days | 180 Days | 364 Days |
| 10,000,001 – 50,000,000 | 10.00 | 10.50 | 11.00 | 12.00 | 13.00 |
| 50,000,001 – 100,000,000 | 11.00 | 11.25 | 11.50 | 12.50 | 14.00 |
| 100,000,001 – 400,000,000 | 12.00 | 12.25 | 12.50 | 13.00 | 14.50 |
| Trading Treasury Bills Rates p.a. | |||
| Maturity Dates | Tenor (Days) | Discount Rate | Effective Yield |
| 31-Jan-19 | 16 | 14.30% | 14.39% |
| 14-Feb-19 | 30 | 13.10% | 13.24% |
| 21-Mar-19 | 65 | 12.90% | 13.20% |
| 07-Nov-19 | 296 | 14.35% | 16.24% |
| Select Macro-economic Indices | |
| Inflation % (November 2018) | 11.28 (-26.61% ytd) |
| PMI (December 2018) | 61.10 |
| MPR (%) | MPR (%) 14 (-5%/+2% around mid-point) |
| CRR (%) | 22.5 |
| Brent Crude Price US$ pbbl | 60.61 (+2.75% 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) | 30,137.53 (+0.58% d/d; -4.11% ytd) |
| Market Capi tal i s ati on (₦’Tri l l i on) | 11.24 |
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.
AIICO Capital is regulated by the Securities and Exchange Commission, and is licensed to provide fund and portfolio management services in Nigeria.
