Financial Markets Today

Financial Markets Today

Nigeria’s economic growth rate for Q4 2018 rose above the +2% mark for the first time in 2018, recording a growth of +2.38% year-on-year vs +1.81% in Q3 2018 and +2.11% in Q4 2017, data released by the Nigerian Bureau of Statistics indicated today. This was on the back of a +2.70% growth in the Non-oil sector, while the Oil sector recorded further contraction for a 3rd consecutive quarter, at -1.61% on lower average crude oil production of 1.91 million barrels per day in Q4 vs 1.95 million barrels per day in Q3 2018.

With the global economy expected to grow at a slower pace vs 2018, on the back of continued slowdown in the Eurozone area, China and possible slowdown in the U.S. economy, we expect this to negatively impact on growth in sub-Sahara Africa and Nigeria in 2019. We also expect growth in the nation’s Oil sector to remain subdued in 2019 on implementation of the production-cut of the Organisation of Petroleum Exporting Countries (OPEC) in Q1 2019.

MONEY MARKETS

CAPITAL MARKETS

FOREIGN EXCHANGE

COMMODITIES

Liquidity in the banking system was to open on a negative today. The Central Bank of Nigeria (CBN) conducted an Open Market Operation (OMO) auction to further tighten system liquidity, closing with a no sale made on all maturities auctioned.

Treasury Bills
A bearish trading relatively quiet trading day in the treasury bills secondary market today, with sell-offs seen particularly on short-dated maturities on tight banking system liquidity. The 28 February and 07 March 2019 maturities traded the most to close at 10.65% and 10.33% respectively, with average rate gaining ca +3ps day-on-day. Please find below a summary of the results of today’s Open Market Operations (OMO) auction:

Tenor 93-Days 184-Days 359-Days
Maturity Date: 16-May-19 15-Aug-19 06-Feb-20
Amount Offered: ₦ 10.00billion ₦ 15.00 billion ₦ 40.00 billion
Subscription: ₦ 2.08billion ₦ 2.51 billion ₦ 16.60 billion
Amount Allotted: Nil Nil Nil
Range of bids: 11.9000% – 11.9000% 13.5000% – 15.0000% 15.0000% – 15.0000%
Stop Rates No Sale No Sale No Sale

There will be a Primary Auction of Treasury Bills tomorrow with ca ₦153.38 billion on offer at the 91-day, 182-day and 364-day maturities. 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 13-Feb-19 91-Day 3,384,180,000.00 11.00% 10.85% – 11.05%
2 13-Feb-19 182-Day 10,000,000,000.00 13.50% 13.05% – 13.30%
3 13-Feb-19 364-Day 140,000,000,000.00 15.00% 14.75% – 15.00%

Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates dropped to 24.17% and 27.50% from 43.33% and 47.50%. Average fixed deposit rate amongst banks monitored showed:
– tier-1 rated banks at 3.50% for 30 – 60 days tenor on ₦10mln – ₦100mln.
– tier-2 rated banks at 8.00% for 30 – 60 days tenor on ₦10mln – ₦100mln.

Bonds
A quiet trading day in the bonds secondary market today, with most of market’s activities seen at the long-end of the curve. The March 2036 and April 2037 maturities traded the most to close at 14.68% and 14.53% with average yields gaining ca +1bps day-on-day.

Equities
The Nigerian equities market closed on a positive note today, appreciating for a 8th consecutive trading day, as the Nigerian Stock Exchange All Share Index (NSE ASI) gained ca +2.14% day-on-day to close at 32,462.31pts, with market’s year-to-date returns at +3.28%. This was on the back of gains in highly capitalized as Dangote Cement Plc (+2.32), Guaranty Trust Bank Plc (+0.26%), Nigerian Breweries Plc (+2.63%) and Zenith Bank Plc (+0.20%) and Nestle Nigeria Plc (+6.00%).

The NSE Oil & Gas, Consumer Goods, Banking, and Industrial indices all gained ca +412bps, +399bps, +129bps and +3bps respectively day-onday. Diamond Bank Plc led the volume chart with 125.82m while Guaranty Trust Bank Plc led the value chart with ₦2.226bn worth of trade.

The Naira depreciated against the dollar at the interbank market window today, at ₦306.75/$1 from ₦306.70/$1. In the parallel market, it also remained stable against the Dollar, Pound Sterling and Euro at ₦361/$1, ₦473/₤1 and ₦411/€1 respectively. The Naira remained stable at the Nigerian Autonomous Foreign Exchange (NAFEX) window at ₦361.38/$1.

Crude oil prices gained today, as the Organisation of Exporting Countries (OPEC) cut its crude oil output for January by 792,000 barrels per day, reducing its total output to 30.8 million barrels per day (mbpd) vs 31.6 mbpd in December 2018. Brent crude oil price gained ca +1.64% at $62.52pb, while WTI crude rose ca +1.39% at $53.14pb, as at report time. Spot gold rose ca +0.10% day-on-day at $1,313.30 per ounce.

Top 5 Equitiy Advancers
Name (Symbol) Closing Price Gain(N) % Change
LIVESTOCK 0.55 0.05 +10.00%
JAIZBANK 0.55 0.05 +10.00%
DANGFLOUR 8.25 0.75 +10.00%
NPFMCRFBK 1.65 0.15 +10.00%
CHAMPION 1.78 0.16 +9.88%
Top 5 Equity Decliners
Name (Symbol) Closing Price Gain(N) % Change
REGALINS 0.23 -0.02 -8.00%
UAC-PROP 1.76 -0.15 -7.85%
LASACO 0.31 -0.02 -6.06%
UNITYBNK 0.95 -0.06 -5.94%
AIICO 0.73 -0.04 -5.19%
Benchmark T-Bills Discount Rates
12-Feb-19 11-Feb-19 Change in Rates
79Days 11.10% 11.10% 0.00%
170Days 13.35% 13.31% 0.04%
303Days 14.88% 14.88% 0.00%
Source: FMDQ DQL for 12 February 2019
*T-Bills Discount Rates are slightly different from current market rates
Benchmark FGN Bond Yields
12-Feb-19 11-Jan-19 Change in Yield
3 yrs: 16.00% 29-Jun 2019 13.40% 13.59% -0.19%
5 yrs: 15.54% 13-Feb 2020 15.33% 15.19% 0.14%
10 yrs: 16.29% 17 Mar 2027 14.79% 14.65% 0.14%
20 yrs: 16.25% 18-Apr 2037 14.53% 14.49% 0.04%
Source: FMDQ DQL for 12 February 2019
AIICO Money Market Fund (AMMF)
Net Yield (As at current date) 13.22% 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
14-Mar-19 30 10.00% 10.08%
09-May-19 86 11.35% 11.66%
01-Aug-19 170 12.20% 12.93%
07-Nov-19 268 14.30% 15.98%

 

Select Macro-economic Indices
Inflation % (December 2018) 11.44 (-25.57% ytd)
PMI (January 2019) 58.50
MPR (%) 14 (-5%/+2% around mid-point)
CRR (%) 22.5
Brent Crude Price US$ pbbl 62.52 (+1.64% d/d
External Reserve (US$’billion) 42.91 (-0.48% ytd)
GDP % (Q3 2018) +2.38% (Q3 2018: +1.81% y/y)
NSE All Share Index (ASI) 32,462.31 (+3.28% d/d; +2.14% ytd
Market Capitalisation (₦’Trillion) 12.11

Financial Markets Update – 12 February 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.
AIICO Capital is regulated by the Securities and Exchange Commission, and is licensed to provide fund and portfolio management services in Nigeria.