Financial Markets Today
All of us at AIICO Capital wish you all the Happiness in the New Year.
Global financial markets continued in highly volatile and uncertain territories, with rising investors’ fears pushing commodity prices to new highs, as price of gold rose to new eight-month’s high of ca $1,310.20 per ounce while U.S. 10yr treasury bonds dropped to +2.726%. The rise in demand for these safe-haven assets can be attributed to rising expectation of global economic slowdown in 2019, increasing U.S./China trade concerns, possible U.S. economic growth slowdown and low optimism of a consistent rise in global crude oil prices. This comes as the U.S. Federal Reserve Bank begins its 1st meeting of 2019 today while U.S. and China hold trade negotiations beginning tomorrow, 30 January.
We expect the U.S. Federal Reserve Bank to maintain current benchmark interest rate of 2.25% – 2.50% at the close of its meeting tomorrow. We also expect continued investors’ interest in safe-haven investments and debt instruments of developed economies on continued global financial markets’ volatility and rising uncertainties.
MONEY MARKETS
CAPITAL MARKETS
FOREIGN EXCHANGE
COMMODITIES
Banking system liquidity opened positive today, at ca ₦65.27bn. The Central Bank of Nigeria (CBN) conducted an Open Market Operation (OMO) auction today, In line with its tight monetary policy.
Treasury Bills
A relatively quiet trading day in the treasury bills secondary market today, with activities focused at the short-end of the curve. Average rate lost ca -4ps day-on-day, with the 28 February 2019 maturity trading the most to close at 11.93% from 12.11%. Pease find below a summary of the results of today’s Open Market Operations (OMO) auction:
| Tenor | 87-Days | 192-Days | 360-Days |
| Maturity Date: | 25-Apr-19 | 15-Aug-19 | 07-Nov-19 |
| Amount Offered: | ₦ 20.00billion | ₦ 50.00billion | ₦ 60.00billion |
| Subscription: | ₦ 10.47billion | ₦ 12.25billion | ₦ 55.07billion |
| Amount Allotted: | ₦ 10.47billion | ₦ 12.25billion | ₦ 55.07billion |
| 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 Treasury Bills auction tomorrow offering ca ₦254.64bn. Please find below our expectation for stop rates at the auction:
| S/N | AUCTION DATE | TENOR | OFFER AMOUNT(NGN) | LAST STOP RATE | EXPECTED STOP RATE RANGE |
| 1 | 30-Jan-19 | 27-Apr-23 | ₦ 50.00 bi l l i on | 15.2500% | 15.05% – 15.30% |
| 2 | 30-Jan-19 | 21-Mar-25 | ₦ 50.00 bi l l i on | 15.5000% | 15.20% – 15.45% |
| 3 | 30-Jan-19 | 28-Feb-28 | ₦ 50.00 bi l l i on | 15.5000% | 15.25% – 15.50% |
Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates dropped to 10.17% and 10.83% from 16.07% and 17.31%. 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, with very little activities across the curve. Average yields declined ca -6bps day on-day, with the February 2028 maturity trading the most to close at 15.35%. Please find below our expectation at tomorrow’s auction:
| S/N | AUCTION DATE | MATURITY DATE | AMOUNT OFFERED(NGN) | LAST STOP RATE | EXPECTED STOP RATE RANGE |
| 1 | 30-Jan-19 | 91 Day | 7,851,744,000.00 | 11.00% | 10.85% – 11.05% |
| 2 | 30-Jan-19 | 182 Day | 69,565,347,000.00 | 13.10% | 13.05% – 13.30% |
| 3 | 30-Jan-19 | 364 Day | 177,219,063,000.00 | 15.00% | 14.80% – 15.05% |
Equities
The Nigerian equities market declined further today, as the Nigerian Stock Exchange All Share Index (NSE ASI) lost ca -0.53% day-on-day to close at 31,178.71pts, with market’s year-to-date returns at -0.80%. This was majorly due price depreciation in Guaranty Trust Bank Plc (-1.31%), Nigerian Breweries Plc (-2.38%) and Zenith Bank Plc (-2.13%).
The NSE Oil & Gas, Banking and Consumer Goods indices lost ca -13bps, -145bps and -56bps day-on-day, while the NSE Industrial index remained flat. Consolidated Hallmark Insurance Plc led the volume chart with 100.41m units while United Bank for Africa Plc led the value chart with trades worth ₦354.75mn.
The Naira appreciated against the dollar at the interbank market window today, at ₦306.75/$1 from ₦306.80/$1. In the parallel market, it remained stable against the Dollar, Pound Sterling and Euro at ₦363/$1, ₦470/₤1 and ₦411/€1 respectively. The Naira depreciated at the Nigerian Autonomous Foreign Exchange (NAFEX) window at ₦362.42/$1 from ₦362.12/$1.
Crude oil prices recovered above the $60 per barrel mark today, as U.S. government imposed new sanctions on Venezuela state-owned oil firm, PDVSA which may limit crude oil output from the member of the Organisation of Petroleum Exporting Countries (OPEC). Brent crude oil price rose ca +2.57% at $61.47pb, while WTI crude also gained ca +3.12% at $53.61pb, as at report time. Spot gold was up ca +0.54% day-on-day at $1,310.20 per ounce.
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| AIICO Money Market Fund (AMMF) | |
| Net Yield (As at current date) | 13.09% per annum |
| Added Benefit | Personal accident insurance cover |
| AIICO Capital Guaranteed Income Note (GIN) Rates p.a. | |||||
| Amount (NGN) | 30 Days | 60 Days | 90 Days | 180 Days | 364 Days |
| 10,000,001 – 50,000,000 | 10.00 | 10.50 | 11.00 | 12.00 | 13.00 |
| 50,000,001 – 100,000,000 | 11.00 | 11.25 | 11.50 | 12.50 | 14.00 |
| 100,000,001 – 400,000,000 | 12.00 | 12.25 | 12.50 | 13.00 | 14.50 |
| Trading Treasury Bills Rates p.a. | |||
| Maturity Dates | Tenor (Days) | Discount Rate | Effective Yield |
| 28-Feb-19 | 30 | 12.40% | 12.52% |
| 21-Mar-19 | 51 | 10.75% | 10.91% |
| 01-Aug-19 | 184 | 13.10% | 14.03% |
| 07-Nov-19 | 282 | 14.35% | 16.14% |
| Select Macro-economic Indices | |
| Inflation % (December 2018) | 11.44 (-25.57% ytd) |
| PMI (December 2018) | 61.10 |
| MPR (%) | 14 (-5%/+2% around mid-point) |
| CRR (%) | 22.5 |
| Brent Crude Price US$ pbbl | 61.47 (+2.57% d/d) |
| External Reserve (US$’billion) | 43.16 (+0.11% ytd) |
| GDP % (Q3 2018) | +1.81% (Q2 2018: +1.50% y/y) |
| NSE All Share Index (ASI) | 31,178.71 (-0.53% d/d; -0.80% ytd) |
| Market Capitalisation (₦’Trillion) | 11.63 |
Financial Markets Update – 29 January 2019
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.
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