Financial Markets Today
Yields of treasuries of Developed economies (DMs) dropped to a 2-month low today, on continued growing fears of escalating U.S./China trade tensions, as investors sought safe-haven risk assets of DMs. This comes as the minutes of the last Federal Open Market Committee (FOMC) meeting concluded on 01 May was released today, with the Committee indicating it would adopt a patient approach in determining future rate changes. Yields on the U.S. 10yr treasuries, German 10yr treasuries, UK 10yr treasuries and French 10yr treasuries declined ca +2.393%, -0.09%, +1.008% and +0.3038%, on a rise in demand for safe-haven treasuries.
We expect continued trade uncertainties between the world’s largest economies to keep investor’s interest in safe-haven instruments sustained in the near term, particularly treasuries of Developed Economies (DMs). We also expect Central Banks of DMs to sustain current dovish monetary stance in the near term.
MONEY MARKETS
CAPITAL MARKETS
FOREIGN EXCHANGE
COMMODITIES
Banking system liquidity opened positive today at ca ₦260.8bn marginally lower than ca ₦265.6bn yesterday. The Central Bank of Nigeria (CBN) did not conduct an Open Market Operation (OMO) auction today.
Treasury Bills
Trading activities in the treasury bills secondary market was relatively quiet today with most of market activities seen at the mid-to-long end of the curve. Average rates shed ca -6bps day-on-day, with the 27 February 2020 paper trading the most to close at 11.60% from 11.62%.
Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded flat day-on-day at 4.57% and 5.29%. 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
The bonds secondary market saw a bit more activity today, with demand on select maturities as investors focused on the primary auction. Average yields shed ca -3bps day-on-day, with July 2021 maturity closing at 14.35% from 14.39%. The Debt Management Office sold a total of ca ₦111bn at today’s Primary Market Auction (PMA), please find below a summary of the results:
| S/N | AUCTION DATE | MATURITY DATE | AMOUNT OFFERED
(NGN) |
AMOUNT ALLOTED
(NGN) |
MARGINAL RATE |
| 1 | 22-May-19 | 27-Apr-23 | ₦35.00 billion | ₦27.375 billion | 14.1100% |
| 2 | 22-May-19 | 26-Apr-29 | ₦35.00 billion | ₦35.00 billion | 14.2400% |
| 3 | 22-May-19 | 26-Apr-49 | ₦30.00 billion | ₦48.930 billion | 14.4900% |
Eurobonds
A bullish day in the nation’s Eurobonds market today, with demand seen across the yield curve. Average yields shed ca -6bps day-on-day with the November 2027 maturity closing at 6.90% from 6.98%.
Equities
The Nigerian equities market appreciated for a 5th consecutive trading day, with the Nigerian Stock Exchange All Share Index (NSE ASI) gaining ca +3.07% day-on-day to close at 31,145.15pts, with the market’s year-to-date returns at -0.91%. This was mainly due to gains in Dangote Cement Plc (+9.73%) and MTN Nigeria Plc (+9.98).
The NSE Industrial index gained ca +450bps, while the NSE Banking, Consumer goods and Oil & Gas indices all lost -267bps, -357bps and -27bps respectively. MTN Nigeria Plc led both the volume and value charts for a 3rd consecutive day with 93.72m units traded at ₦13.58bn.
The Naira declined against the dollar in the interbank market at ₦306.90/$1 from ₦306.95/$1. It remained flat against the dollar and Euro at ₦361/$1 and ₦404/€1 respectively, while depreciating against the Pound sterling at ₦471/₤1 from ₦467/₤1, in the parallel market. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate depreciated to ₦360.42/$1 from ₦360.18/$1.
Crude oil prices declined today, as data released by the Energy Information Administration (EIA) showed a week-on-week growth of 4.7 million barrels in U.S. stockpiles vs market analysts expectation of a decline of 599,000 barrels. Brent crude oil price was down ca –1.91% day-on-day at $70.80pb, while WTI lost ca -2.79% day-on-day at $61.37pb, as at report time. Spot gold gained ca +0.19% at $1,275.60 per ounce.
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| Benchmark T-Bills Discount Rates | ||||
| 22-May-19 | 21-May-19 | Change in Rates | ||
| 86 Days . | 10.00% | 10.00% | 0.00% | |
| 176 Days- | 11.54% | 12.02% | -0.48% | |
| 344 Days. | 12.35% | 12.35% | 0.00% | |
| Source: FMDQ DQL for 22 April 2019 *T-Bills Discount Rates are slightly different from current market rates |
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| Benchmark FGN Bond Yields | ||||
| 22-May-19 | 21-May-19 | Change in Yield | ||
| 3 yrs: 16.00% 15-Jul-2021 | 14.35% | 14.39% | -0.04% | |
| 5 yrs: 15.54% 27-Apr 2023 | 14.35% | 14.32% | 0.03% | |
| 10 yrs: 13.98% 17 Mar 2027 | 14.21% | 14.35% | -0.14% | |
| 20 yrs: 16.25% 18-Apr 2037 . | 14.36% | 14.37% | -0.01% | |
| Source: FMDQ DQL for 22 April 2019 | ||||
| Benchmark FGN EuroBond Yields | ||||
| 22-May-19 | 21-May-19 | Change in Yield | ||
| 3 yrs: NGERIA 6 3/4 01/28/21 | 4.72% | 4.78% | -0.06% | |
| 5 yrs: NGERIA 6 3/8 07/12/23 | 5.45% | 5.51% | -0.06% | |
| 10 yrs: NGERIA 6 1/2 11/28/27 | 6.90% | 6.98% | -0.08% | |
| 20 yrs: NGERIA 7.696 02/23/38 | 7.94% | 7.98% | -0.04% | |
| 30 yrs: NGERIA 9.248 01/21/49 | 8.49% | 8.56% | -0.07% | |
| Source: FMDQ DQL for 22 April 2019 | ||||
| AIICO Money Market Fund (AMMF) | |
| Net Yield (As at current date) | 13.29% 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 | 71 | 9.50% | 9.68% |
| 17-Oct-19 | 148 | 10.85% | 11.35% |
| 07-Nov-19 | 169 | 10.85% | 11.42% |
| 16-Jan-20 | 239 | 11.15% | 12.03% |
| Select Macro-economic Indices | |
| Inflation % (April 2019) | 11.37 (+1.07% ytd) |
| PMI (May 2019) | 57.80 |
| MPR (%) | 13.5 (-5%/+2% around mid-point) |
| CRR (%) | 22.5 |
| Brent Crude Price US$ pbbl | 70.80 (-1.91% d/d) |
| External Reserve (US$’billion) | 45.060 (+2.21% ytd) |
| GDP % (Q4 2018) | +2.01% (Q4 2018: +2.38% y/y) |
| NSE All Share Index (ASI) | 31,145 (+3.07% d/d; -0.91% ytd) |
| Market Capitalisation (₦’Trillion) | 13.72 |
Financial Markets Update – 22 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.
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