Financial Markets Today

Financial Markets Today

Yield on U.S. treasury bonds declined today, on rise in investors’ interest after the U.S. Federal Reserve Bank (Fed) Chairman maintained the Fed’s dovish monetary stance before the U.S. Senate, further re-iterating the possibility of not reducing its ca $3.8 trillion government treasury balance sheet as previous planned. This comes as data released by the U.S. Commerce Department indicated housing construction starts dropped 11.2% in December, its lowest in 2years, as the 10yr, 5yr and 2yr U.S. Treasury bonds declined to ca +2.645%, +2.452% and +2.488%, respectively.

With expectation of slower GDP growth in the U.S. for Q4 2018, to be released on 28 February and uncertainties of agreed terms of current U.S./China trade negotiations, we expect continued investors’ uncertainties to increase global financial markets volatility for the remainder of Q1 2019.

MONEY MARKETS

CAPITAL MARKETS

FOREIGN EXCHANGE

COMMODITIES

Liquidity in the banking system opened on a positive note today, at ca ₦114.64bn. There was no Open Market Operation (OMO) auction conducted by the Central Bank of Nigeria (CBN) today.

Treasury Bills
A very active trading day in the treasury bills secondary market today, with continued demand seen across the curve, on the absence of Open Market Operation (OMO) auction and expectation of lower stop rates at tomorrow’s primary market auction. Average rates dropped ca -28bps day-on-day, with the 29 August maturity trading the most to close at 12.55% from 13.05%. There will be a Primary Market Auction (PMA) tomorrow with ca ₦115.118bn been rolled-over. Please find below our expectation of stop rates at the auction:

S/N AUCTION DATE TENOR OFFER AMOUNT (NGN) LAST STOP RATE EXPECTED STOP RATE RANGE
1 27-Feb-19 91-Day 24,372,000,000.00 10.97% 10.75% – 11.00%
2 27-Feb-19 182-Day 38,751,000,000.00 13.40% 12.80% – 13.05%
3 27-Feb-19 364-Day 51,995,000,000.00 14.95% 14.65% – 14.90%

Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates dropped day-on-day to 13.79% and 14.71% from 17.64% and 18.79%. Average fixed deposit rates amongst banks monitored showed:
– tier-1 rated banks at 3.50% for 30 – 60 days tenor on ₦10mln – ₦100mln.
– tier-2 rated banks at 7.50% for 30 – 60 days tenor on ₦10mln – ₦100mln.

Bonds
The bonds secondary market continues to see buying interest, with demand seen across the curve today, particularly on the March 2036 maturity, which traded the most to close at 14.38% from 14.57%. Average yield dropped ca -5bps day-on-day.

Equities
The Nigerian equities market declined today, with the Nigerian Stock Exchange All Share Index (NSE ASI) losing ca -0.69% day-on-day to close at 32,473.82pts, with market’s year-to-date returns at +3.32%. This was largely due to price gains in Nestle Nigeria Plc (-4.43%), Guaranty Trust Bank Plc (-0.13%) and Zenith Bank Plc (-0.77%).

The NSE Consumer Goods and Banking indices lost ca -157bps and -118bps respectively while Industrial and Oil & Gas indices gained ca +4bps and +156bps. respectively. Sunu Assurances Nigeria Plc led the volume and with 50.81m units and Guaranty Trust Bank Plc led the value chart with ₦677.66mn.

The Naira remained stable against the dollar at the interbank market window today, at ₦306.85/$1. In the parallel market, it remained stable against the Dollar, Pound Sterling and Euro at ₦360/$1, ₦470/₤1 and ₦408/€1 day-on-day, respectively. The Naira appreciated at the Nigerian Autonomous Foreign Exchange (NAFEX) window at ₦361.46/$1 from ₦361.56/$1.

Crude oil prices rose today, on continued optimism that output-cut by the Organisation of Petroleum Exporting Countries (OPEC) would continue to support crude oil prices. Brent crude oil price gained ca +1.08% at $65.46pb, while WTI crude gained ca +0.70% at $55.87pb, as at report time. Spot gold rose ca -0.16% day-on-day at $1,327.40 per ounce.

Top 5 Equitiy Advancers
Name (Symbol) Closing Price Gain(N) % Change
AFRIPRUD 4.84 0.44 +10.00%
OANDO 7.25 0.65 +9.85%
AGLEVENT 0.34 0.03 +9.68%
CUTIX 2.05 0.18 +9.63%
AIRSERVICE 7.05 0.60 +9.30%
Top 5 Equity Decliners
Name (Symbol) Closing Price Gain(N) % Change
NPFMCRFBK 1.49 -0.16 -9.70%
UBN 6.65 -0.60 -8.28%
JAPAULOIL 0.25 -0.02 -7.41%
WEMABANK 0.85 -0.06 -6.59%
ABCTRANS 0.54 -0.03 -5.26%
Benchmark T-Bills Discount Rates
26-Feb-19 25-Feb-19 Change in Rates
72Days 10.11% 10.91% -0.80%
156Days 12.28% 12.93% -0.65%
303Days 14.50% 14.68% -0.18%
Source: FMDQ DQL for 26 February 2019
*T-Bills Discount Rates are slightly different from current market rates
Benchmark FGN Bond Yields
26-Feb-19 25-Jan-19 Change in Yield
3 yrs: 16.00% 29-Jun 2019 14.57% 14.58% -0.01%
5 yrs: 15.54% 13-Feb 2020 14.65% 14.46% 0.19%
10 yrs: 16.29% 17 Mar 2027 14.40% 14.45% -0.05%
20 yrs: 16.25% 18-Apr 2037 14.42% 14.42% 0.00%
Source: FMDQ DQL for 26 February 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
21-Mar-19 23 7.70% 7.74%
09-May-19 72 10.55% 10.77%
01-Aug-19 156 11.00% 11.54%
07-Nov-19 254 13.85% 15.33%

 

Select Macro-economic Indices
Inflation % (January 2019) 11.37 (-0.61% ytd)
PMI (January 2019) 58.50
MPR (%) 14 (-5%/+2% around mid-point)
CRR (%) 22.5
Brent Crude Price US$ pbbl 65.46 (+1.08% d/d)
External Reserve (US$’billion) 42.53 (-1.36% ytd)
GDP % (Q4 2018) +2.38% (Q3 2018: +1.81% y/y)
NSE All Share Index (ASI) 32,473.82 (-0.69% d/d; +3.32% ytd
Market Capitalisation (₦’Trillion) 12.11

Financial Markets Update – 26 February 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.
AIICO Capital is regulated by the Securities and Exchange Commission, and is licensed to provide fund and portfolio management services in Nigeria.