Financial Markets Today
Global equities markets rallied today, with the U.S. Dow Jones Industrial Average (DJIA), S & P 500, NASDAQ, London’s FTSE, Chinese SHANGHAI and Japanese NIKKEI indices gaining ca +0.59%, +0.80%, +1.05%, +0.88%, +0.35% and +0.20%. This comes after the U.S. Federal Reserve Bank (Fed) deepened its dovish monetary stance, indicating it will maintain current dovish stance though 2019, and further supported by today’s decision by the Bank of England (BOE) to hold its benchmark interest at 0.75%, after it downgraded its economic growth outlook for 2019 to 1.2% from 1.7%.
With continued expectation of a slowdown in global economic growth for 2019, continued dovish monetary stance by Central Banks of developed economies (DMs) and persisting uncertainties of a resolution to U.S./China trade negotiations, we expect this to further spur investors’ interest in safe-haven risk assets of DMs in the near term.
MONEY MARKETS
CAPITAL MARKETS
FOREIGN EXCHANGE
COMMODITIES
Liquidity in the banking system opened positive today, at ca ₦188.15bn from yesterday’s opening levels of ca ₦199.86bn. The Central Bank of Nigeria (CBN) held an Open Market Operation (OMO) auction today, selling a total of ₦293.38bn at a maximum rate of 13.04% on the 350-day maturity.
Treasury Bills
A bearish day in the treasury bills secondary market today despite relatively less transactions. Investors reacted to the Central Bank (CBN)’s announcement of an Open Market Operation (OMO) auction, offering the long-end 350-day maturity for the 1st time in 2 weeks. Average rates gained +27bps day-on-day, with the 29 August 2019 maturity trading the most to close at 13.48% from 13.07%.
| Tenor | 91-Days | 182-Days | 350-Days |
| Maturity Date: | 20-Jun-19 | 19-Sep-19 | 05-Mar-20 |
| Amount Offered: | ₦ 30.000 billion | ₦ 70.000 billion | ₦ 100.000 billion |
| Subscription: | ₦ 15.040 billion | ₦ 79.470 billion | ₦ 381.950 billion |
| Amount Allotted: | ₦ 15.040 billion | ₦ 49.950 billion | ₦ 228.390 billion |
| Range of bids: | 11.0000% – 11.8000% | 12.5000% – 13.1000% | 12.8500% – 13.9800% |
| Stop Rates | 11.8000% | 12.9800% | 13.0400% |
Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates rose day-on-day to 16.00% and 17.25% from 10.17% and 11.17%. 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
A relatively quiet trading day in the domestic bonds secondary market today. Activities was seen at the long-end of the curve, with average yield dropping ca -11bps day-on-day. The February 2028 maturity traded the most to close at 14.25% from 14.38%.
Eurobonds
Investors showed continued interest in the nation’s Eurobonds market today, with average yield shedding ca -7bps day-on-day, particularly the November 2025 maturity which shed ca -13bps day-on-day.
Equities
The Nigerian equities market declined for a 6th consecutive trading day today, with the Nigerian Stock Exchange All Share Index (NSE ASI) losing ca -0.50% day-on-day to close at 30,885.31pts, with market’s year-to-date returns at -1.73%. This was largely on the back of price decline in Seplat Petroleum Development Company Plc (-5.43%), Guaranty Trust Bank Plc (-1.77%) and Stanbic IBTC Holding Plc (-1.10%).
The NSE Banking and Oil & Gas indices lost ca -35bps and -328bps respectively, while the NSE Consumer Goods and Industrial indices gained ca +13bps and +118bps respectively. Access Bank Plc led the volume chart with 93.47m while Zenith Bank topped the value charts with ₦678.71mn.
The Naira remained stable against the dollar at the interbank market window today, at ₦306.90/$1. In the parallel market, it remained stable against the Dollar at ₦360/$1, while appreciating against the Pound sterling and Euro at ₦406/€1 and ₦473/₤1 from ₦408/€1 and ₦473/₤1, respectively. The Naira appreciated at the Nigerian Autonomous Foreign Exchange (NAFEX) window at ₦359.95/$1 from ₦360.10/$1.
Crude oil prices dropped today with resistance near 2019 high levels, as investors booked in profit on gains over the last 3 trading days. Brent crude oil price dropped ca -0.74% at $67.99pb, while WTI shed ca -0.13% at $60.15pb, as at report time. Spot gold dipped ca -0.21% to $1,309.41 per ounce having earlier touched a 3 week high of $1,320.22.
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| Benchmark T-Bills Discount Rates | ||||
| 21-Mar-19 | 20-Mar-19 | Change in Rates | ||
| 77Days . | 12.19% | 12.15% | 0.04% | |
| 168Days | 13.23% | 13.02% | 0.21% | |
| 343Days. | 12.78% | 12.57% | 0.21% | |
| Source: FMDQ DQL for 21 March 2019 *T-Bills Discount Rates are slightly different from current market rates |
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| Benchmark FGN Bond Yields | ||||
| 21-Mar-19 | 20-Mar-19 | Change in Yield | ||
| 3 yrs: 16.00% 15-Jul-2021 | 14.67% | 14.73% | -0.06% | |
| 5 yrs: 15.54% 27-Apr 2023 | 14.46% | 14.46% | 0.00% | |
| 10 yrs: 16.29% 17 Mar 2027 | 14.40% | 14.40% | 0.00% | |
| 20 yrs: 16.25% 18-Apr 2037 . | 14.12% | 14.12% | 0.00% | |
| Source: FMDQ DQL for 21 March 2019 | ||||
| Benchmark FGN EuroBond Yields | ||||
| 21-Mar-19 | 20-Mar-19 | Change in Yield | ||
| 3 yrs: NGERIA 6 3/4 01/28/21 | 4.80% | 4.84% | -0.04% | |
| 5 yrs: NGERIA 6 3/8 07/12/23 | 5.28% | 5.37% | -0.09% | |
| 10 yrs: NGERIA 6 1/2 11/28/27 | 6.54% | 6.63% | -0.09% | |
| 20 yrs: NGERIA 7.696 02/23/38 | 7.63% | 7.70% | -0.07% | |
| 30 yrs: NGERIA 9.248 01/21/49 | 8.12% | 8.16% | -0.04% | |
| Source: FMDQ DQL for 21 March 2019 | ||||
| AIICO Money Market Fund (AMMF) | |
| Net Yield (As at current date) | 13.40% 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 | 133 | 11.45% | 11.95% |
| 17-Oct-19 | 210 | 12.55% | 13.53% |
| 07-Nov-19 | 231 | 12.55% | 13.63% |
| 16-Jan-20 | 301 | 12.40% | 13.81% |
| Select Macro-economic Indices | |
| Inflation % (February 2019) | 11.31 (-1.14% ytd) |
| PMI (February 2019) | 57.10 |
| MPR (%) | 14 (-5%/+2% around mid-point) |
| CRR (%) | 22.5 |
| Brent Crude Price US$ pbbl | 67.99 (-0.74% d/d) |
| External Reserve (US$’billion) | 43.50 (+0.89% ytd) |
| GDP % (Q4 2018) | +2.38% (Q3 2018: +1.81% y/y) |
| NSE All Share Index (ASI) | 30,885.31 (-0.50% d/d; -1.73% ytd) |
| Market Capitalisation (₦’Trillion) | 11.52 |
Financial Markets Update – 21 March 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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