Financial Markets Today
U.S. equities prices rallied today, reversing earlier losses with the Dow Jones Industrial Average (DJIA), S&P 500 and NASDAQ benchmark indices all gaining ca +0.01%, +0.36% and +0.27% respectively. This comes of the back of comments by the President of the New York Federal Reserve Bank – John Williams, a voting member of the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve Bank (Fed) indicated the Apex bank needed to act quickly in an economic slowdown, further increasing investors expectation for a bigger cut to the Fed’s benchmark interest rate, at its meeting later this month.
We expect continued high volatility in global financial markets in the near term, with increasing demand for safe-haven risk assets on lingering concerns of significant slowdown in the global economic growth, continued trade tensions and expectation of a larger negative impact on U.S. economic growth rate for Q2 2019, expected to be released next week Friday.
MONEY MARKETS
CAPITAL MARKETS
FOREIGN EXCHANGE
COMMODITIES
Banking system liquidity was expected to open positive today, as the interbank remains liquid with expected inflow from bond coupon payments and Open Market Operation (OMO) maturities of ca ₦177mln. The Central Bank of Nigeria (CBN) today, conducted the first OMO auction in 2-week.
Treasury Bills
The treasury bills secondary market traded mixed today, after a surprise conduct of an OMO auction by the CBN. Rates recovered from yesterday’s low after the reduced stop rates at the Primary Market Auction (PMA). Average yields gained ca +4bps day-on-day with the 26 December 2019 maturity closing at 10.24% from 10.14%. Please find below a summary of the results of today’s auction:
| Tenor | 91-Days | 225-Days | 353-Days |
| Maturity Date: | 17-Oct-19 | 16-Jan-20 | 16-Jul-20 |
| Amount Offered: | ₦10.000 billion | ₦15.000 billion | ₦50.000 billion |
| Subscription | ₦41.19 billion | ₦56.81 billion | ₦700.79 billion |
| Amount Allotted: | ₦4.06 billion | ₦43.11 billion | ₦352.83 billion |
| Range of bids | 11.2000% – 11.6000% | 11.5000% – 12.1000% | 12.0000% – 12.4000% |
| Stop Rate | 11.4000% | 11.8400% | 12.4000% |
Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded higher day-on-day at 6.29% and 7.00% from 3.86% and 4.50%, as market reacted to the conduct of an Open Market Operation (OMO) auction. 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 7.00% for 30 – 60 days tenor on ₦10mln – ₦100mln.
Bonds
Yields in the bonds secondary market opened higher today, as market reacted to the release of the Q3 Bonds issuance calendar by the Debt Management’s Office (DMO) and the conduct of an Open Market Operation (OMO) auction by the Central Bank (CBN). Average yields inched up marginally despite weak trading volumes, as the February 2028 paper closed at 13.66% from 13.62%.
Eurobond
Not a lot of activity in the nation’s Eurobonds market today, as market showed little interest for the Nigerian sovereign papers. Average yields marginally gained ca +2bps day-on-day with the November 2027 paper closing at 6.23% from 6.21%.
Equities
The Nigerian equities market closed on a negative note today for the 8th consecutive trading session, with the Nigerian Stock Exchange All Share Index (NSE ASI) marginally shedding ca -0.64% day-on-day to close at 27,864.49pts, and market’s year-to-date returns at -11.35%. This was due to losses in StanbicIBTC Bank Plc (-1.28%), MTN Nigeria Plc (-0.78%) and Zenith Bank Plc (-0.54%).
The NSE Banking, Oil & Gas and Consumer goods indices all lost ca -119bps, -474bps and -37bps respectively, while the Industrial index gained ca +6bps. FBN Holding Plc led the volume chart with ca 33.33m units while Nigeria Breweries Plc led the value chart with ca ₦461.34mn worth of trades.
The Naira traded flat day-on-day against the dollar in the interbank and parallel markets at ₦306.95/$1 and ₦360/$1 respectively. In the parallel market, it was unchanged against the Pound Sterling and the Euro at ₦462/₤1 and ₦405/€1 respectively. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate depreciated day-on-day at ₦361.23/$1 from ₦361.02/$1.
Crude oil prices declined today, on the back of reports that the International Energy Agency (IEA) cut its global oil demand growth forecasts to 1.1million barrels per day (mbpd), a further reduction from it’s earlier cut to 1.2mbpd in June 2019. Brent crude oil price shed ca -2.67% day-on-day at $61.96pb, while WTI shed ca -2.80% day-on-day at $55.19pb, as at report time. Spot gold gained ca +0.36% at $1,424.40 per ounce.
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| Benchmark T-Bills Discount Rates | ||||
| 18-Jul-19 | 17-Jul-19 | Change in Rates | ||
| 84 Days | 9.91% | 9.86% | 0.05% | |
| 175 Days- | 10.59% | 11.53% | 0.06% | |
| 329 Days. | 11.10% | 11.10% | 0.00% | |
| Source: FMDQ DQL for 18 July 2019 | ||||
| Benchmark FGN Bond Yields | ||||
| 18-Jul-19 | 17-Jul-19 | Change in Yield | ||
| 3 yrs: 16.00% 15-Jul-2021 | 13.69% | 13.69% | 0.00% | |
| 5 yrs: 15.54% 27-Apr 2023 | 13.23% | 13.23% | 0.00% | |
| 10 yrs: 13.98% 23-Feb 2028 | 13.66% | 13.62% | 0.04% | |
| 20 yrs: 16.25% 18-Apr 2037 | 14.07% | 14.05% | 0.02% | |
| 30 yrs: 14.80% 26-Apr 2049 | 14.10% | 14.10% | 0.00% | |
| Source: FMDQ DQL for 18 July 2019 | ||||
| Benchmark FGN EuroBond Yields | ||||
| 18-Jul-19 | 17-Jul-19 | Change in Yield | ||
| 3 yrs: NGERIA 6 3/4 01/28/21 | 4.02% | 4.02% | 0.00% | |
| 5 yrs: NGERIA 6 3/8 07/12/23 | 4.64% | 4.65% | -0.01% | |
| 10 yrs: NGERIA 6 1/2 11/28/27 | 6.23% | 6.21% | 0.02% | |
| 20 yrs: NGERIA 7.696 02/23/38 | 7.46% | 7.42% | 0.04% | |
| 30 yrs: NGERIA 9.248 01/21/49 | 7.99% | 7.97% | 0.02% | |
| Source: FMDQ DQL for 18 July 2019 | ||||
| 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 |
| 29-Aug-19 | 42 | 9.65% | 9.76% |
| 17-Oct-19 | 91 | 9.70% | 9.94% |
| 07-Nov-19 | 112 | 9.60% | 9.89% |
| 16-Jan-20 | 182 | 10.25% | 10.80% |
| Select Macro-economic Indices | |
| Inflation % (June2019) | 11.22 (-0.18% ytd) |
| PMI (June 2019) | 57.40 |
| MPR (%) | 13.5 (-5%/+2% around mid-point) |
| CRR (%) | 22.5 |
| Brent Crude Price US$ pbbl | 61.96 (-2.76% d/d) |
| External Reserve (US$’billion) | 45.094 (+1.39% ytd) |
| GDP % (Q1 2019) | +2.01% (Q4 2018: +2.38% y/y) |
| NSE All Share Index (ASI) | 27,864.49 (-0.64% d/d; -11.35% ytd) |
| Market Capitalisation (₦’Trillion) | 13.58 |
Financial Markets Update – 18 JULY 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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