Financial Markets Today

Financial Markets Today

Global crude oil prices rose today, reversing some of the losses of the past few volatile trading sessions, of the back of reports of drone attacks on oil pumping installations in Saudi Arabia, world’s 3rd largest oil producer and largest in the Organisation of Petroleum Exporting Countries (OPEC). Brent crude oil price traded at ca $71.4 per barrel today and comes despite quickly escalating trade tensions between the world’s largest economies – U.S. and China, and increasing investor’s fears of global economic slowdown in 2019.

With expectation of continued escalation of U.S./China trade tensions as the U.S. prepares another round of tariffs on ca $300 billion worth of additional Chinese imports after last week’s implementation of a rise in tariffs and retaliatory tariffs from China, we expect continued volatility in global financial markets in the near term, with Brent Crude oil price expected to trade ca $68 – $73 per barrel in the near term.

MONEY MARKETS

CAPITAL MARKETS

FOREIGN EXCHANGE

COMMODITIES

Banking system liquidity opened positive today at ca ₦133.4bn up from ca ₦121.6bn yesterday, as there was no major funding activity by the banks. The Central Bank of Nigeria (CBN) also did not conduct an Open Market Operation (OMO) auction today.

Treasury Bills
Bullish sentiments persisted in the treasury bills secondary today, with some demand on the mid-dated maturities. Total volumes traded was low, with average rates shedding ca -5bps day-on-day as the 17 October 2019 maturity closed at 12.33% from 12.40%. There will be a Primary Market Auction (PMA) tomorrow with ₦33.8bn on offer. Please find below our expectation of stop rates at the auction:

S/N AUCTION DATE TENOR AMOUNT OFFERED

(NGN)

LAST STOP RATE EXPECTED STOP RATE RANGE
1 15-May-19 91-Day 3,384,180,000.00 10.00% 9.80%-10.05%
2 15-May-19 182-Day 16,920,900,000.00 12.49% 12.20%-12.45%
3 15-May-19 364-Day 13,536,720,000.00 12.77% 12.50%-12.75%

Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded lower day-on-day at 11.71% and 12.64% from 16.00% and 16.71%. 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
The bonds secondary market continued on a quiet note today, with profit taking on select maturities. Average yields gained ca +4bps day-on-day, with the February 2028 maturity closing at 14.43% from 14.29%.

Eurobonds

Another bearish day in the nation’s Eurobonds market today, as the market continues to react on-going trade tensions between the U.S. and China which has fueled some risk-off sentiments in emerging markets. Average yields gained ca +4bps day-on-day with the January 2049 maturity closing at 8.71% from 8.67%.

Equities
The Nigerian equities market continued on a negative note today, declining for a 7th consecutive trading day, with the Nigerian Stock Exchange All Share Index (NSE ASI) shedding ca -0.22% day-on-day to close at 28,422.76pts, and market’s year-to-date returns at -9.57%. This was mainly due to losses in Nestle Nigeria Plc (-3.48%) and Seplat Petroleum Development Company Plc (-0.38%).

The NSE Banking and Oil & Gas indices both gained ca +129bps and +68bps while Consumer goods and Industrial indices shed ca -168bps and -57bps respectively. Guaranty Trust Bank Plc led both the volume and value chart with 33.11m units and ₦1.03bn respectively.

The Naira remained flat against the dollar in the interbank at ₦306.95/$1; but depreciated in the parallel market against the Pound sterling, Euro and Dollar at ₦472/₤1, ₦402/€1 and ₦360/$1 respectively. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate appreciated to ₦360.42/$1 from ₦360.48/$1.

Oil prices rose today after Saudi Arabia reported a drone attack on some of its oil pumping stations, raising fears of growing supply shortage. Brent crude oil price rose by ca +1.84% day-on-day at $71.52pb, while WTI gained ca +1.54% day-on-day at $61.98pb, as at report time. Spot gold shed ca -0.41% to close at $1,296.40 per ounce.

Top 5 Equitiy Advancers
Name (Symbol) Closing Price Gain(N) % Change
NEIMETH 0.60 0.05 +9.09%
COURTVILLE 0.26 0.02 +8.33%
THOMASWY 0.27 0.02 +8.00%
AGLEVENT 0.28 0.02 +7.69%
JAPAULOIL 0.30 0.02 +7.14%
Top 5 Equity Decliners
Name (Symbol) Closing Price Gain(N) % Change
UPL 1.67 -0.18 -9.73%
ROYALEX 0.22 -0.22 -8.33%
CHAMS 0.33 -0.03 -8.33%
GOLDINSURE 0.20 -0.01 -4.76%
HONYFLOUR 1.10 -0.05 -4.35%
Benchmark T-Bills Discount Rates
14-May-19 13-May-19 Change in Rates
86 Days                                      . 11.05% 10.97% 0.08%
177 Days 12.39% 12.34% 0.05%
338 Days. 12.50% 12.50% 0.00%
Source: FMDQ DQL for 14 May 2019
*T-Bills Discount Rates are slightly different from current market rates
Benchmark FGN Bond Yields
14-May-19 13-May-19 Change in Yield
3 yrs: 16.00% 15-Jul-2021 14.53% 14.40% 0.13%
5 yrs: 15.54% 27-Apr 2023 14.07% 14.07% 0.00%
10 yrs: 13.98% 23 Feb 2028 14.43% 14.29% 0.14%
20 yrs: 16.25% 18-Apr 2037  . 14.29% 14.19% 0.10%
Source: FMDQ DQL for 14 May 2019
Benchmark FGN EuroBond Yields
14-May-2019 13-May-2019 Change in Yield
3 yrs: NGERIA 6 3/4 01/28/21 4.96% 4.98% -0.00%
5 yrs: NGERIA 6 3/8 07/12/23 5.74% 5.72% 0.02%
10 yrs: NGERIA 6 1/2 11/28/27 7.11% 7.02% 0.09%
20 yrs: NGERIA 7.696 02/23/38 8.11% 8.07% 0.04%
30 yrs: NGERIA 9.248 01/21/49 8.71% 8.67% 0.04%
Source: FMDQ DQL for 14 May 2019
AIICO Money Market Fund (AMMF)
Net Yield (As at current date) 13.27% 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
01-Aug-19 79 9.85% 10.06%
17-Oct-19 156 12.05% 12.70%
07-Nov-19 177 11.90% 12.63%
16-Jan-20 247 12.05% 13.12%
Select Macro-economic Indices
Inflation % (March 2019) 11.25 (-1.66% ytd)
PMI (April 2019) 57.70
MPR (%) 13.5 (-5%/+2% around mid-point)
CRR (%) 22.5
Brent Crude Price US$ pbbl 71.52(+1.84% d/d)
External Reserve (US$’billion) 44.875 (+2.25% ytd)
GDP % (Q4 2018) +2.38% (Q3 2018: +1.81% y/y)
NSE All Share Index (ASI) 28,422.76(-0.22% d/d; -9.57% ytd)
Market Capitalisation (₦’Trillion) 10.68

Financial Markets Update – 14 May 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.