Financial Markets Today

Financial Markets Today

Prices of safe-haven risk assets rose to record highs today, on continued rise in risk-off sentiments and demand for safe-haven assets by investors, particularly for Gold and Treasuries of Developed Economies (DMs). This comes as Consumer Confidence index data released today by the U.S. Conference Board showed a significant decline in consumer confidence in June, at its lowest in almost 2years, at 121.5pts vs market analyst expectation of ca 131.1pts. Prices of U.S. treasuries rose to their highest in almost 2years, as yields declined to their lowest since November 2017, with the 2yr, 10yr and 30yr treasuries dropping to ca +1.73%, +1.99% and +2.53% respectively, while price of Gold in the international market rose to a new 6-year high at ca $1,426.00 per ounce.

With increasing uncertainties of a possible resolution to global trade tensions and growing expectation for continued demand for safe-haven risk assets in the near term, as investors continue to price in expectation for a rate cut by the U.S. Federal Reserve Bank in H2 2019, we expect further rise in prices of safe-haven risk assets in the near term.

MONEY MARKETS

CAPITAL MARKETS

FOREIGN EXCHANGE

COMMODITIES

Banking system liquidity opened positive today at ca ₦292.9bn higher than ₦248.6bn yesterday, with no major funding requirement by the Banks. The Central Bank of Nigeria (CBN) did not conduct an Open Market Operation (OMO) auction today.

Treasury Bills
The treasury bills secondary market continued on a bullish note today, with demand shifting to the mid-to-long dated maturities, as interbank liquidity remains positive and no OMO auction by the CBN. Average yields shed ca -8bps day-on-day with the 11 June 2020 maturity closing at 11.70% from 12.01%.

Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded lower day-on-day at 7.50% and 8.21% from 9.86% and 10.43%. 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 more activity today, with demand concentrated on the short-to-mid dated maturities. Average yields trended downwards shedding ca -8bps day-on-day, with the July 2021 paper closing at 14.02% from 14.66%. Please find below our expectations for tomorrow’s Primary Market Auction (PMA):

S/N AUCTION DATE MATURITY DATE AMOUNT OFFERED

(NGN)

LAST STOP RATE EXPECTED STOP RATE RANGE
1 26-Jun-19 27-Apr-23 ₦30.00 billion 14.1100% 14.10% – 14.35%
2 26-Jun-19 26-Apr-29 ₦40.00 billion 14.2400% 14.25% – 14.50%
3 26-Jun-19 26-Apr-49 ₦30.00 billion 14.4900% 14.30% – 14.55%

Eurobonds

A bearish day in the nation’s Eurobonds market today, with mild sell offs across the curve. Average yields trended upwards, gaining ca +3bps day-on-day, with the 2049 paper closing at 8.23% from 8.18%.

Equities
The Nigerian equities market closed negative today, with the Nigerian Stock Exchange All Share Index (NSE ASI) marginally shedding ca -0.47% day-on-day to close at 29,668.68pts, and market’s year-to-date returns at -5.61%. This was mainly due to a loss in Guaranty Trust Bank Plc (-1.61%), Stanbic IBTC Nigeria Plc (-1.60%) and MTN Nigeria Plc (-0.77%).

The NSE Banking, Oil & Gas and Consumer goods indices lost ca -93bps, -231bps and -8bps respectively, while the NSE Industrial index gained ca +94bps. Guaranty Trust Bank Plc led both the volume and value charts with ca 50.44m units traded at ca ₦1.57bn worth of trades.

The Naira remained flat against the dollar in the interbank and parallel markets at ₦306.90/$1 and ₦362/$1 respectively. It also remained unchanged in the parallel market against the Pound sterling at ₦463/₤1 but marginally depreciated against the Euro at ₦407/€1 from ₦406/€1. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate depreciated day-on-day at ₦360.72/$1 from ₦360.43/$1.

Crude oil prices rose today, ahead of data release from the Energy Information Administration (EIA) tomorrow which is expected to show a drop in U.S. crude oil stockpile. Brent crude oil price gained ca +0.22% day-on-day at $65.00pb, while WTI marginally shed ca -0.16% day-on-day at $57.81pb, as at report time. Spot gold also gained ca +0.691% at $1,428.00 per ounce.

Top 5 Equitiy Advancers
Name (Symbol) Closing Price Gain(N) % Change
SOVRENINS 0.23 0.02 +9.52%
CCNN 13.30 1.15 +9.47%
CHAMPION 1.69 0.13 +8.33%
LIVESTOCK 0.56 0.03 +5.66%
JAIZBANK 0.47 0.02 +4.44%
Top 5 Equity Decliners
Name (Symbol) Closing Price Gain(N) % Change
FO 29.00 -3.00 -9.38%
NEM 2.30 -0.22 -8.73%
PRESTIGE 0.54 -0.05 -8.47%
AIICO 0.66 -0.03 -4.35%
UBA 6.15 -0.25 -3.91%
Benchmark T-Bills Discount Rates
25-June-19 24-June-19 Change in Rates
86 Days                                      . 10.87% 10.70% 0.17%
177 Days- 11.81% 11.81% 0.00%
352 Days. 11.70% 12.01% -0.31%
Source: FMDQ DQL for 25 June 2019
*T-Bills Discount Rates are slightly different from current market rates
Benchmark FGN Bond Yields
25-June-19 24-June-19 Change in Yield
3 yrs: 16.00% 15-Jul-2021 14.02% 14.66% -0.64%
5 yrs: 15.54% 27-Apr 2023 14.23% 14.52% -0.29%
10 yrs: 13.98% 17 Mar 2027 14.49% 14.49% 0.00%
20 yrs: 16.25% 18-Apr 2037  . 14.52% 14.50% 0.02%
Source: FMDQ DQL for 25 June 2019
Benchmark FGN EuroBond Yields
25-June-19 24-June-19 Change in Yield
3 yrs: NGERIA 6 3/4 01/28/21 4.16% 4.14% 0.02%
5 yrs: NGERIA 6 3/8 07/12/23 5.04% 5.03% 0.01%
10 yrs: NGERIA 6 1/2 11/28/27 6.72% 6.69% 0.03%
20 yrs: NGERIA 7.696 02/23/38 7.70% 7.64% 0.06%
30 yrs: NGERIA 9.248 01/21/49 8.23% 8.18% 0.05%
Source: FMDQ DQL for 25 June 2019
AIICO Money Market Fund (AMMF)
Net Yield (As at current date) 13.28% 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 65 10.45% 10.65%
17-Oct-19 114 11.20% 11.61%
07-Nov-19 135 11.50% 12.01%
16-Jan-20 205 11.65% 12.47%
Select Macro-economic Indices
Inflation % (May 2019) 11.40 (+0.26% ytd)
PMI (May 2019) 57.80
MPR (%) 13.5 (-5%/+2% around mid-point)
CRR (%) 22.5
Brent Crude Price US$ pbbl 65.00(+0.22% d/d)
External Reserve (US$’billion) 45.089 (+1.41% ytd)
GDP % (Q4 2018) +2.01% (Q4 2018: +2.38% y/y)
NSE All Share Index (ASI) 29,668.69 (-0.47% d/d; -5.61% ytd)
Market Capitalisation (₦’Trillion) 13.07

Financial Markets Update – 25 JUNE 2019

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