All of us at AIICO Capital wish you all the Happiness in the New Year.
Global financial markets turned sharply volatile today, after yesterday’s release of the Chinese Q4 2018 economic data which indicated its weakest growth since 1990 and marked 3 consecutive quarters of economic slowdown with a GDP growth rate of 6.4% year-on-year (y/y) vs 6.5% y/y in Q3 2018. This further increased investors’ fears of a global economic slowdown in 2019 with the International Monetary Fund (IMF) lowering its forecast for global growth in 2019 to 3.5% y/y vs 3.7% y/y previously forecasted in October 2018. Global equities market declined sharply with the U.S. Dow Jones Industrial Average (DJIA), S & P 500, NASDAQ, German DAX, London’s FTSE and Chinese SHANGHAI indices all losing ca -0.72%, -0.87%, -1.02%, -0.63%, -1.06% and -1.18% respectively. Brent crude oil price also dropped ca -3% day-on-day to ca $60.78 per barrel.
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) concluded its first policy meeting of 2019 today, retaining all key policy rates for a 16th consecutive time. The MPC retained the Monetary Policy Rate (MPR), Cash Reserve Ratio (CRR) and Liquidity ratio at 14%, 22.5% and 30% respectively while maintaining an asymmetric corridor at +200/–500 basis points around the MPR. Key considerations of the Committee included an expectation of ca 2.28% growth in GDP for 2019, convergence of FX exchange rates in the Investors and Exporters FX (I & E FX) and Bureau De Change (BDCs) windows and gradual accumulation of the FX reserves.
We expect continued volatility in global financial markets in 2019, on rising expectation of a slowdown in global growth and continued monetary normalization in developed economies. This is expected to further increase flight to safety in the near term. We also expect Nigeria’s Central Bank (CBN) to maintain its current tight liquidity stance with multiple conduct of Open Market Operations (OMO) auctions to keep banking system liquidity significantly low, while continuing its FX intervention in all segments of the current multiple FX windows in a bid to maintain FX stability as we approach the 16 February presidential election date.
Liquidity in the banking system opened positive today, at ca ₦11.08bn. In line with the tight monetary policy of the Central Bank of Nigeria (CBN), it conducted and Open Market Operations (OMO) auction today.
A relatively less active trading day in the treasury bills secondary market today, with early demand turning to sell-offs after the announcement of an Open Market Operations (OMO) auction. Average rate dropped ca -9ps day-on-day, with the 28 February 2019 maturity trading the most to close at 13.12% from 13.60%. Pease find below a summary of the results of today’s Open Market Operations (OMO):
|Amount Offered:||₦ 20.00 billion||₦ 30.00 billion||₦ 150.00 billion|
|Subscription:||₦ 0.20 billion||₦ 7.030 billion||₦ 53.480 billion|
|Amount Allotted:||₦ 0.20 billion||₦ 7.030 billion||₦ 53.480 billion|
|Range of bids:||11.9000% – 11.9000%||13.5000% – 15.0000%||15.0000% – 15.0000%|
Open Buy Back (OBB) and Overnight (O/N) rates dropped to 17.50% and 19.08% from 25.33% and 27.17% 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.
Continued quietness in the bonds secondary market today, with only very few transactions seen across the curve. Average yields gained ca +5bps day-on-day, with the February 2020 maturity trading the most to close at 15.43%.
The Nigerian equities market appreciated marginally today, as the Nigerian Stock Exchange All Share Index (NSE ASI) gained ca +0.01% day-on-day to close at 30,736.88pts, with market’s year-to-date returns at -2.21%. This was largely due price appreciation in Guaranty Trust Bank Plc (+1.26%) and Zenith Banking Plc (+1.40%).
The NSE Industrial and Consumer Goods indices lost ca -245bps and -27bps day-on-day while the NSE Banking and Oil & Gas indices gained ca +76bps and +168bps respectively. Diamond Bank Plc led the volume chart with 71.58m units while Guaranty Trust Bank Plc led the value chart with trades worth ₦847.79mn.
The Naira remained stable against the dollar at the interbank market window today, at ₦306.80/$1. In the parallel market, it depreciated against the Dollar at ₦363/$1 from ₦362/$1, appreciated against the Pound Sterling at ₦463/₤1 from ₦464/₤1 while it remained stable against the Euro at ₦411/€1. The Naira appreciated at the Nigerian Autonomous Foreign Exchange (NAFEX) window at ₦362.32/$1 from ₦362.39/$1.
Crude oil prices declined sharply today, after yesterday’s release of the Chinese Q4 2018 GDP data, indicating a further drop in GDO growth rate to 6.4 year-on-year (y/y) from 6.5% y/y in Q3. Brent crude oil price lost ca -3.12% at $60.78pb, while WTI crude declined ca – 3.40% at $51.97pb, as at report time. Spot gold was down ca -0.23% day-on-day at $1,279.70 per ounce.
|AIICO Money Market Fund (AMMF)|
|Net Yield (As at current date)||13.00% per annum|
|Added Benefit||Personal accident insurance cover|
|AIICO Capital Guaranteed Income Note (GIN) Rates p.a.|
|Amount (NGN)||30 Days||60 Days||90 Days||180 Days||364 Days|
|10,000,001 – 50,000,000||10.00||10.50||11.00||12.00||13.00|
|50,000,001 – 100,000,000||11.00||11.25||11.50||12.50||14.00|
|100,000,001 – 400,000,000||12.00||12.25||12.50||13.00||14.50|
|Trading Treasury Bills Rates p.a.|
|Maturity Dates||Tenor (Days)||Discount Rate||Effective Yield|
|Select Macro-economic Indices|
|Inflation % (December 2018)||11.44 (-25.57% ytd)|
|PMI (December 2018)||61.10|
|MPR (%)||MPR (%) 14 (-5%/+2% around mid-point)|
|Brent Crude Price US$ pbbl||60.78 (-3.12% d/d)|
|External Reserve (US$’billion)||43.11 (-0.01% ytd)|
|GDP % (Q3 2018)||+1.81% (Q2 2018: +1.50% y/y)|
|NSE Al l Share Index (ASI)||30,736.88 (+0.01% d/d; -2.21% ytd)|
|Market Capitalisation (₦’Trillion)||11.46|