Nigerian Financial Markets Weekly

Nigerian Markets

Key Events this week:

Nigeria’s economic growth rate for Q4 2018 rose above the +2% mark for the first time in 2018, recording a growth of +2.38% year-on-year vs +1.81% in Q3 2018 and +2.11% in Q4 2017, data released by the Nigerian Bureau of Statistics indicated on Tuesday. This was on the back of a +2.70% growth in the Non-oil sector, while the Oil sector recorded further contraction for a 3rd consecutive quarter, at -1.61% on lower average crude oil production of 1.91 million barrels per day in Q4 vs 1.95 million barrels per day in Q3 2018.

With the global economy expected to grow at a slower pace vs 2018, on the back of continued slowdown in the Eurozone area, China and possible slowdown in the U.S. economy, we expect this to negatively impact on growth in sub-Sahara Africa and Nigeria in 2019. We also expect growth in the nation’s Oil sector to remain subdued in 2019 on implementation of the production-cut of the Organisation of Petroleum Exporting Countries (OPEC) in Q1 2019.

Other Events this week included:

Nigeria’s Headline inflation for January 2019 declined to 11.37% year-on-year (y/y), from 11.44% y/y recorded in December 2018, data from the Nigerian Bureau of Statistics indicated on Friday. The drop can be attributed to a drop in food sub-index to 13.51% vs 13.56% in December 2018 while the Core sub-index rose marginally to 9.9% from 9.8%. This comes on the back of increased tightening of banking system liquidity by the Central Bank of Nigeria (CBN) since December 2018, taking out ca ₦2.482 trillion from the banking system in January and ca ₦5.692 trillion in the last 2 months, in its attempt to limit impact of electioneering spending on inflation. We expect the Central Bank of Nigeria (CBN) to sustain its current tight monetary stance after the general elections holding tomorrow, to curtail any negative impact of possible post-election headwinds on headline inflation.

Investors’ optimistic outlook to global economic growth in 2019 was negatively impacted towards the end of the
week, particularly on Thursday and Friday, after the release of retail sales figures for December 2018 by the U.S. Commerce Department, indicating its biggest monthly drop in retail sales since September 2009. Retail sales in the U.S. declined ca -1.2% month-on-month, further raising investors’ fears of a global economic slowdown in 2019, and increasing demand for government treasuries of developed economies. With continued uncertainty of global economic growth in 2019, on possible economic slowdown in the world’s largest economies – U.S. and China, we expect increasing demand for safe-haven assets in Q1 2019, despite current optimistic sentiments of U.S./China trade negotiations.

MONEY MARKETS

CAPITAL MARKETS

FOREIGN EXCHANGE

Banking system liquidity was majorly negative this week, opening at ca -₦159bn. Inflows of ca ₦800bn from maturing Open Market Operations (OMO) treasury bills on Thursday and FX refund was mopped up by the Central Bank of Nigeria (CBN) from the conduct 4 OMO auctions. System liquidity was expected to open the last trading day of the week on a negative note.

Treasury Bills
Trading in the treasury bills market remained bearish for a 2nd consecutive week, on the back of a very tight banking
system. The Central Bank (CBN) conducted 3 Open Market Operations (OMO) auctions in its attempt to further tighten system liquidity, with a Primary Market Auction (PMA) held mid-week. Average rates rose ca +12bps week-on-week. Please find below the summary of the OMO and PMA auctions held this week:

Open Market Operations (OMO) – 11 February 2019
Tenor	94-Days	178-Days	360-Days
Maturity Date:	16-May-19	08-Aug-19	06-Feb-20
Amount Offered:	₦ 5.00 billion	₦ 10.00 billion	₦ 10.00 billion
Subscription:	₦ 2.41 billion	₦ 1.08 billion	₦ 34.87 billion
Amount Allotted:	₦ 2.41 billion	₦ 1.08 billion	₦ 34.87 billion
Range of bids:	11.9000% – 11.9000%	13.5000% – 15.0000%	15.0000% – 15.0000%
Stop Rates	11.9000%	13.5000%	15.0000%

Open Market Operations (OMO) – 12 February 2019
Tenor	93-Days	184-Days	359-Days
Maturity Date:	16-May-19	01-Aug-19	06-Feb-20
Amount Offered:	₦ 10.00 billion	₦ 15.00 billion	₦ 40.00 billion
Subscription:	₦ 2.08 billion	₦ 2.51 billion	₦ 16.60 billion
Amount Allotted:	Nil	Nil	₦ Nil
Range of bids:	11.9000% – 11.9000%	13.5000% – 15.0000%	15.0000% – 15.0000%
Stop Rates	No Sale	No sale	No Sale

PRIMARY MARKET AUCTION (PMA) – 13 February 2019
Tenor	91-Days	182-Days	364-Days
Maturity Date:	16-May-19	15-Aug-19	13-Feb-20
Amount Offered:	₦ 3.384 billion	₦ 10.000 billion	₦ 140.00 billion
Subscription:	₦ 11.577 billion	₦ 22.114 billion	₦ 404.892 billion
Amount Allotted:	₦ 3.384 billion	₦ 10.000 billion	₦ 140.000 billion
Range of bids:	10.8000% – 12.5000%	12.0000% – 13.5000%	14.8000% – 16.5237%
Stop Rates	10.9700%	13.4000%	14.9500%

Open Market Operations (OMO) – 14 February 2019
Tenor	91-Days	175-Days	364-Days
Maturity Date:	16-May-19	08-Aug-19	13-Feb-19
Amount Offered:	₦ 50.00 billion	₦ 150.00 billion	₦ 450.00 billion
Subscription:	₦ 40.73 billion	₦ 25.73 billion	₦ 440.90 billion
Amount Allotted:	₦ 40.73 billion	₦ 25.73 billion	₦ 440.90 billion
Range of bids:	11.0000% – 11.9000%	11.9000% – 13.5000%	14.9500% – 15.0000%
Stop Rates	11.9000%	13.5000%	15.0000%

Bank Placements

Open Buy back (OBB) and Overnight (O/N) rates closed at 15.83% and 17.50% from 18.67% and 19.42% levels
respectively, the previous week. Average fixed deposit rates amongst banks monitored showed at the end of
the week:

– tier-1 rated banks at 3.50% for 30 – 60 days tenor on ₦10mln – ₦100mln.

– tier-2 rated banks at 8.00% for 30 – 60 days tenor on ₦10mln – ₦100mln.

Bonds

Demand was seen in the bonds secondary market this week, with activities majorly at the mid-to-long end of the curve, particularly the March 2036 which lost -34bps week on-week.

Equities

The equities market appreciated for a 2nd consecutive week, with interest majorly from domestic institutional investors. The Nigerian Stock Exchange All Share Index (NSE ASI) gained +3.76% week-on-week to close at 32,715.20pts, with market’s year-to-date returns at +4.06%. This was largely attributed to price appreciation in Dangote Cement Plc (+4.58%), Nigerian Breweries Plc (+6.41%), Nestle Nigeria Plc (+4.33%) and Zenith
Bank Plc (+1.43%).

During the week, the Naira depreciated against the dollar at the interbank market window, at ₦306.75/$1 from ₦306.70/$1. At the parallel market, the Naira depreciated against the U.S. Dollar at ₦362/$1 from ₦361/$1, remained stable against the Pound Sterling at ₦472/₤1 and appreciated against the Euro at ₦410/€1 from ₦411/€1. The Naira remained stable week-on-week at the Nigerian Autonomous Foreign Exchange (NAFEX) window at ₦361.54/$1.

AIICO Money Market Fund (AMMF)
Net Yield (As at current date)	13.25% 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
14-Feb-19	27	10.70%	10.79%
09-Mar-19	83	12.00%	12.34%
01-Aug-19	167	12.20%	12.92%
07-Nov-19	265	14.35%	16.02%

Select Macro-economic Indices
Inflation % (December 2018)	11.44 (-25.57% ytd)
PMI (January 2019)	58.50
MPR (%)	14 (-5%/+2% around mid-point)
CRR (%)	22.5
Brent Crude Price US$ pbbl	65.57 (+6.03% w/w)
External Reserve (US$’billion)	42.86 (-0.59% ytd)
GDP % (Q4 2018)	+2.38% (Q3 2018: +1.81% y/y)
NSE All Share Index (ASI)	32,715.20 (+3.76% w/w; +4.09% ytd)
Market Capitalisation (₦’Trillion)	12.20

Top 5 Equitiy Advancers
Name (Symbol)	Closing Price	Gain(N)	% Change
WEMABANK	1.03	0.32	+45.07%
LIVESTOCK	0.73	0.22	+44.00%
DANGFLOUR	9.15	2.30	+33.58%
TRANSCORP	1.71	0.38	+28.57%
ROYALEX	0.33	0.07	+26.92%

Top 5 Equity Decliners
Name (Symbol)	Closing Price	Gain(N)	% Change
CILEASING	7.33	-1.71	-18.92%
MRS	20.85	-2.30	-9.94%
ACADEMY	0.37	-0.04	-9.76%
MEDVIEW	1.70	-0.15	-8.11%
UACN	8.65	-0.70	-7.49%