Financial Markets Today

Financial Markets Today

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) concluded its 4th meeting of 2019 today, leaving all key monetary policy indicators unchanged. The MPC unanimously agreed to retain the benchmark Monetary Policy Rate (MPR) at 13.50% with an asymmetric corridor of +200/-500 bps around the MPR, Cash Reserve Ratio (CRR) at 22.50% and Liquidity Ratio at 30%. The Central Bank Governor – Godwin Emefiele stated that the committee will observe the effects of recent initiatives by the Apex Bank and current lax liquidity levels, which were aimed at encouraging lending to the real sector by Deposit Money Banks (DMBs). This also comes of the back of increased global trade tensions and rising expectation of increased stimulus by both the European Central Bank (ECB) and U.S. Federal Reserve Bank, at their next meetings
on 25 and 30 July 2019.

With continued uncertainties and fears of a higher global economic slowdown in the second half of 2019, with the International Monetary Fund (IMF) lowering its 2019 economic growth outlook for a 3rd time this year to 3.2% vs 3.3% previously forecasted in April, expected increased accommodative monetary stance by Apex Banks of Developed Economies (DMs), and continued uncertainties of global trade tensions, we expect the CBN to maintain current monetary policy stance in the near term, with
possible reaction to changes in monetary stances by Apex Banks of DMs at its next meeting in September 2019.

MONEY MARKETS

CAPITAL MARKETS

FOREIGN EXCHANGE

COMMODITIES

Liquidity in the banking system was expected to open on a positive note today. The Central Bank of Nigeria (CBN) did not conduct an Open Market Operation (OMO) auction today.

Treasury Bills
A bit of cautious trading in the treasury bills secondary market today, with market focused on expected outcome of the Monetary Policy Committee (MPC) meeting. Market traded largely flat with average yields remaining unchanged, and the 11 June 2020 maturity closing at 11.10%.

Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded lower day-on-day at 16.71% and 17.86% from 19.57% and 21.14%. 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
Mixed sentiments persisted in the bonds secondary market today, with some seen demand at the mid-to-long end of the curve, as market anticipated the outcome of the Monetary Policy Committee (MPC) meeting. Average yields marginally shed ca -1bps, with the April 2049 maturity trading the most to close at 14.03% from 14.05%. There will be a Primary Market Auction (PMA) tomorrow with ₦145bn on offer across the 5yr, 10yr and 30yr maturities. Please find below our expectation for stop rates at the
auction:

S/N AUCTION DATE MATURITY DATE AMOUNT OFFERED
(NGN)
LAST STOP RATE EXPECTED STOP
RATE RANGE
1 24-Jul-19 27-Apr-23 ₦ 40.00 billion 14.3000% 13.25% – 13.50%
2 24-Jul-19 26-Apr-29 ₦ 50.00 billion 14.5000% 13.65% – 13.90%
3 24-Jul-19 26-Apr-49 ₦ 55.00 billion 14.6800% 13.95% – 14.20%

Eurobond

A very active day in the nation’s Eurobonds market today, with persistent demand across the curve. Average yields shed ca -8bps day-on-day with the January 2049 paper closing at 7.89% from 7.98%.

Equities
The Nigerian equities market closed on a positive note today, with the Nigerian Stock Exchange All Share Index (NSE ASI) gaining ca +1.21% day-on-day to close at 28,144.87pts, and market’s year-to-date returns at -10.45%. This was due to gains in Zenith Bank Plc (+0.54%), MTN Nigeria Plc (+0.79%) and Dangote Cement Plc (+2.35%).

The NSE Banking, Consumer goods and Industrial indices gained ca +46bps, +166bps and +391bps respectively, while the Oil & Gas indicex lost ca -66bps. Guaranty Trust Bank Plc led both the volume and value chart with ca 15.65m and ₦453.43mn worth of trades, respectively.

The Naira traded flat day-on-day against the dollar in the interbank and parallel markets at ₦306.90/$1 and ₦360/$1 respectively. In the parallel market, it appreciated against the Pound Sterling at ₦455/₤1 from 458/₤1 and remained flat against the Euro at ₦403/€1. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate appreciated day-on-day at ₦361.51/$1 from ₦361.55/$1.

Crude oil prices traded lower today, on rising concerns of expected slowdown in global demand for crude oil and escalation of tensions in the middle east region. Brent crude oil price lost ca -0.49% day-on-day at $62.95pb, while WTI lost ca -0.27% day-on-day at $56.07pb, as at report time. Spot gold lost ca -0.54% at $1,419.20 per ounce.

Top 5 Equitiy Advancers
Name (Symbol) Closing Price Gain(N) % Change
NEIMETH 0.55 0.05 +10.00%
WAPCO 14.40 1.30 +9.92%
NAHCO 2.57 0.22 +9.36%
UBN 6.85 0.40 +6.20%
WAPIC 0.38 0.02 +5.56%
Top 5 Equity Decliners
Name (Symbol) Closing Price Loss(N) % Change
FO 18.15 -2.00 -9.93%
INTBREW 13.80 -1.50 -9.80%
CORNERST 0.20 -0.02 -9.09%
LINKASSURE 0.53 -0.05 -8.62%
IKEJAHOTEL 1.34 -0.12 -8.22%
Benchmark T-Bills Discount Rates
  23-Jul-19 22-Jul-19 Change in Rates
86 Days                                       10.07% 9.79% 0.28%  
177 Days- 10.53% 11.22% -0.69%  
324 Days. 11.10% 11.10% 0.00%  
Source: FMDQ DQL for 23 July 2019
Benchmark FGN Bond Yields
  23-Jul-19 22-Jul-19 Change in Yield
3 yrs: 16.00% 15-Jul-2021 12.74% 12.74% 0.00%  
5 yrs: 15.54% 27-Apr 2023 13.43% 13.43% 0.00%  
10 yrs: 13.98% 23-Feb 2028 13.62% 13.62% 0.00%  
20 yrs: 16.25% 18-Apr 2037   13.99% 13.95% 0.04%  
30 yrs: 14.80% 26-Apr 2049 14.03% 14.05% -0.02%  
Source: FMDQ DQL for 23 July 2019
Benchmark FGN EuroBond Yields
  23-Jul-19 22-Jul-19 Change in Yield
3 yrs: NGERIA 6 3/4 01/28/21 3.98% 4.01% -0.03%  
5 yrs: NGERIA 6 3/8 07/12/23 4.55% 4.60% -0.06%  
10 yrs: NGERIA 6 1/2 11/28/27 6.14% 6.22% -0.08%  
20 yrs: NGERIA 7.696 02/23/38 7.37% 7.46% -0.09%  
30 yrs: NGERIA 9.248 01/21/49 7.89% 7.98% -0.09%  
Source: FMDQ DQL for 23 July 2019
AIICO Money Market Fund (AMMF)
Net Yield (As at current date) 12.91% 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
26-Sep-19 65 9.65% 9.82%
31-Oct-19 100 9.00% 9.23%
16-Jan-20 177 9.95% 10.45%
28-May-20 310 10.20% 11.17%
Select Macro-economic Indices
Inflation % (June 2019) 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 62.95 (-0.49% 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) 28,144.87 (+1.21% d/d; -10.45 ytd)
Market Capitalisation (₦’Trillion) 13.72

Financial Markets Update – 23 JULY 2019

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