Financial Markets Today

Financial Markets Today

The European Central Bank (ECB) concluded its monetary policy meeting today, with strong signals for increasing monetary easing, and the ECB President – Mario Draghi indicating the need for a significant amount of monetary stimulus to keep favourable financial conditions and support expansion in the Eurozone area. This comes of the back of rising investors’ fears of a bigger slowdown in global economic growth in 2019 after manufacturing activities in the largest economy in the Eurozone area – Germany (PMI) dropped to 43.1 points in July from 45 points in June, as well as a drop in manufacturing activities in the largest economy in the world – the U.S. with PMI dropping to 50 points vs 51 points expectation. Further comments by the ECB President of low risks for recession in the Eurozone arear caused a reversal in the downward trend in yields in the Eurozone seen earlier in the day.

We expect investors to remain cautious in the near term despite the ECB’s indication of its monetary easing policy stance and plans for additional monetary stimulus (QE) to boost economic growth in the Eurozone area in 2019. We also expect investors to look toward the U.S. Federal Reserve Bank monetary policy meeting expected to hold from 30 – 31 July next week, with mixed sentiments after U.S. economic data released today showed a better-than-expected Jobless claims which dropped to its lowest in 3months at 206,000 vs expected 219,000 claims.

MONEY MARKETS

CAPITAL MARKETS

FOREIGN EXCHANGE

COMMODITIES

Amount of money in the banking system opened on a positive note today at ca ₦21.67bn, lower than ca ₦25.59bn it opened at 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 ended on a bearish note, with some sell-offs seen particularly on the 42days – 203days tenor due to tight interbank liquidity. Average yields gained ca +9bps day-on-day as the 28 November 2019 maturity closed at 9.92% from 9.11%.

Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded lower day-on-day at 14.29% and 15.00% from 15.86% and 16.43%. 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
Activities in the domestic bonds secondary market traded mixed today, with yields trending ca -22bps lower on the April 2049 maturity at the start of trading, of the back of lower-than-expected stop rates at yesterday’s primary market auction. Some sell-off was seen across the curve towards the close of market activities, which cut back the day-on-day decline in yields. Average yields marginally gained +2bps day-on-day, with the February 2028 closing the day at 13.85% from 13.77%.

Eurobond

The Eurobond market opened today with continued demand on most maturities in the Nigerian Eurobond space, as Investors showed continued zest for the nations USD bonds instruments. Average yields declined -10bps day-on-day with the November 2027 paper closing at 5.87% from 6.01%.

Equities
The Nigerian equities market declined for a 2nd consecutive trading day, with the Nigerian Stock Exchange All Share Index (NSE ASI) depreciating by ca -0.35% day-on-day to close at 27,990.61pts, while market’s year-to-date returns declined further to -10.94%. This was due to losses in Dangote Cement Plc (-1.16%), MTNN Plc (-1.57%) and Zenith Bank Plc (-0.54%).

The NSE Industrial and Consumer indices gained ca +26bps and +16bps, while the NSE Oil & Gas & Industrial indices lost ca -81bps and -39bps respectively. Courtville Plc led the volume chart with ca 150.04m units and while the MTNN Plc led the value chart with ca ₦427.48mn.

The Naira traded flat day-on-day for the third time this week against the dollar in the interbank and parallel markets to close at ₦306.90/$1 and ₦360/$1 respectively. In the parallel market, it traded flat against the Pound Sterling day-on-day closing at ₦455/₤1 while it appreciated against the Euro at ₦403/€1 from ₦404/€1. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate depreciated day-on-day at ₦361.60/$1 from ₦361.59/$1.

Crude oil prices appreciated day-on-day, off the back of a drop in weekly U.S. crude inventories by 10.8 million barrels vs market analyst expectation of 4 million barrels, data released by the Energy Information Administration (EIA) showed. However, potential gains were capped by effects of yesterday’s lower-than-expected Purchasing Manager Index (PMI) readings in the U.S., Germany and France. Brent crude oil price gained ca +0.68% day-on-day at $63.61pb, while WTI gained ca +0.72% day-on-day at
$56.28pb, as at report time. Spot gold shed ca -0.464% at $1,417.00 per ounce.

Top 5 Equitiy Advancers
Name (Symbol) Closing Price Gain(N) % Change
FCMB 1.73 0.14 +8.81%
CHAMS 0.27 0.02 +8.00%
FLOURMILL 14.85 0.85 +6.07%
NEM 2.20 0.12 +5.77%
MBENEFIT 0.21 0.01 +5.00%
Top 5 Equity Decliners
Name (Symbol) Closing Price Gain(N) % Change
WAPIC 0.36 -0.04 -10.00%
GSPECPLC 5.20 -0.55 -9.57%
MORISON 0.50 -0.05 -9.09%
CAVERTON 2.34 -0.23 -8.95%
OANDO 3.80 -0.20 -5.00%
Benchmark T-Bills Discount Rates
  25-Jul-19 24-Jul-19 Change in Rates
84 Days 10.42% 10.33% 0.09%  
175 Days- 10.85% 10.74% 0.11%  
322 Days. 11.10% 11.10% 0.00%  
Source: FMDQ DQL for 25 July 2019
Benchmark FGN Bond Yields
  25-Jul-19 24-Jul-19 Change in Yield
3 yrs: 16.00% 15-Jul-2021 13.00% 13.00% 0.00%  
5 yrs: 15.54% 27-Apr 2023 13.20% 13.43% -0.23%  
10 yrs: 13.98% 23-Feb 2028 13.85% 13.77% 0.08%  
20 yrs: 16.25% 18-Apr 2037 13.99% 13.99% 0.00%  
30 yrs: 14.80% 26-Apr 2049 13.97% 14.10% -0.13%  
Source: FMDQ DQL for 25 July 2019
Benchmark FGN EuroBond Yields
  25-Jul-19 24-Jul-19 Change in Yield
3 yrs: NGERIA 6 3/4 01/28/21 3.85% 3.91% -0.06%  
5 yrs: NGERIA 6 3/8 07/12/23 4.42% 4.49% -0.07%  
10 yrs: NGERIA 6 1/2 11/28/27 5.87% 6.01% -0.14%  
20 yrs: NGERIA 7.696 02/23/38 7.16% 7.29% -0.13%  
30 yrs: NGERIA 9.248 01/21/49 7.72% 7.82% -0.10%  
Source: FMDQ DQL for 25 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 41 9.55% 9.65%
17-Oct-19 90 8.50% 8.68%
07-Nov-19 111 9.55% 9.84%
16-Jan-20 181 9.80% 10.30%
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 63.61 (+0.51% d/d)
External Reserve (US$’billion) 45.043 (+1.36% ytd)
GDP % (Q1 2019) +2.01% (Q4 2018: +2.38% y/y)
NSE All Share Index (ASI) 27,990.61 (-0.35% d/d; -10.94 ytd)
Market Capitalisation (₦’Trillion) 13.64

Financial Markets Update – 25 JULY 2019

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