Financial Markets Today
U.S. financial markets traded mixed today, with equity benchmark indices moving in mixed direction while yields on benchmark treasuries marginally declined day-on-day, on investors’ mixed of the potential outcomes of the Federal Open Market Committee (FOMC) meeting of the U.S. Federal Reserve Bank and continued uncertainties of global trade tensions. While the Dow Jones Industrial Average (DJIA) gained ca +0.12%, both the S & P 500 and NASDAQ declined by ca -0.21% and -0.53% respectively. With yields on 2yr, 10yr and 30yr U.S. Treasuries which move inversely to price, marginally declined to ca +1.86%, +2.07% and +2.59% respectively.
We expect continued mute and cautious trading by investors till the release of the outcome of the meeting of the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve Bank scheduled on Wednesday, with rising expectation for the FOMC to cut its benchmark by ca 25bps, from current 2.25% – 2.50% to 2.00% and 2.5%.
MONEY MARKETS
CAPITAL MARKETS
FOREIGN EXCHANGE
COMMODITIES
The amount of money in the Nigerian banking system opened on a negative note today, at ca -₦142.97bn from the positive position it closed at the previous week at ca ₦4.13bn. The Central Bank of Nigeria (CBN) did not conduct an Open Market Operation (OMO) auction today.
Treasury Bills
The treasury bills secondary market kicked off the first trading day on a bearish note, with sell offs seen on the long end of the curve, Average rates gained ca +12bps day-on-day as the 11 June 2020 maturity closed at 11.58% from 11.10%.
Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded lower day-on-day to open the week at 13.14% and 14.29% from 21.86% and 23.21% respectively, of the back of inflows from Statutory Revenue Allocation (SRA) and Bonds coupon payments. 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
Federal Government (FGN) bonds in the domestic secondary market opened the week on a mixed note today, with some demand seen at the long end of the curve, as the April 2049 closed at 14.03% from 14.12%, and some profit taking was also seen at the mid end of the curve with the February 2028 closing at 13.87% from 13.59%. Average yields marginally gained +1bps day on day.
Eurobond
Sell-offs and bearish sentiments continued in the Eurobond space for the 3rd consecutive day with sell-offs seen, particularly on the November 2027 and January 2049 maturities which closed the day at 6.10% and 7.92% from 6.05% and 7.87% respectively. Average yields gained ca +4bps day-on-day.
Equities
The Nigerian equities market opened the first trading day of the week on a bullish note today, with the Nigerian Stock Exchange All Share Index (NSE ASI) gaining ca +0.11% day-on-day to close at 27,950.36pts, and market’s year-to-date returns further dropping to -11.07%. This was mainly due to gains in Guaranty Trust Bank Plc (+0.88%), Nestle Plc (+0.77%) and Stanbic Bank Plc (+0.13%).
The NSE Consumer and Industrial indices gained ca +39bps and +20bps while the NSE Banking and Oil & Gas indices lost ca -2bps and -125bps respectively. Zenith Bank Plc led the volume chart with ca 11.26m units and while Nestle Plc led the value chart with ca ₦230.18mn worth of trade.
The Naira appreciated against the dollar day-on-day in the interbank market to close at ₦306.85/$1 from ₦306.90/$1 while in the parallel markets it remained stable to close at ₦360/$1 respectively. In the parallel market, it traded flat against the Pound Sterling and the Euro appreciated day-on-day closing at ₦455/₤1 and ₦402/€1 from ₦403/€1 respectively. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate marginally depreciated day-on-day at ₦361.63/$1 from ₦361.56/$1.
Crude oil price gained today on the back of rising expectation of interest rate cut by the U.S. Federal Reserve Bank and announced re-commencement of negotiation meeting between U.S./China Trade. Brent crude oil price gained ca +0.41% day-on-day at $63.72pb, while WTI gained ca +1.26% day-on-day at $56.91pb, as at report time. Spot gold gains ca +0.162% at $1,421.50 per ounce.
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| Benchmark T-Bills Discount Rates | ||||
| 29-Jul-19 | 26-Jul-19 | Change in Rates | ||
| 87 Days | 10.73% | 10.40% | 0.33% | |
| 178 Days | 10.82% | 10.82% | 0.0% | |
| 318 Days | 11.58% | 11.10% | 0.48% | |
| Source: FMDQ DQL for 29 July 2019 | ||||
| Benchmark FGN Bond Yields | |||||
| 29-Jul-19 | 26-Jul-19 | Change in Yield | |||
| 3 yrs: 16.00% 15-Jul-2021 |
|
13.00% | -0.01% | ||
| 5 yrs: 15.54% 27-Apr 2023 | 13.01% | 13.01% | -0.0% | ||
| 10 yrs: 13.98% 23-Feb 2028 | 13.87% | 13.59% | 0.28% | ||
| 20 yrs: 16.25% 18-Apr 2037 | 13.78% | 14.08% | -0.3% | ||
| 30 yrs: 14.80% 26-Apr 2049 | 14.03% | 14.12% | -0.09% | ||
| Source: FMDQ DQL for 29 July 2019 | |||||
| Benchmark FGN EuroBond Yields | ||||
| 29-Jul-19 | 26-Jul-19 | Change in Yield | ||
| 3 yrs: NGERIA 6 3/4 01/28/21 | 4.01% | 3.96% | 0.05% | |
| 5 yrs: NGERIA 6 3/8 07/12/23 | 4.55% | 4.52% | 0.03% | |
| 10 yrs: NGERIA 6 1/2 11/28/27 | 6.1% | 6.05% | 0.05% | |
| 20 yrs: NGERIA 7.696 02/23/38 | 7.35% | 7.31% | 0.04% | |
| 30 yrs: NGERIA 9.248 01/21/49 | 7.92% | 7.87% | 0.05% | |
| Source: FMDQ DQL for 29 July 2019 | ||||
| AIICO Money Market Fund (AMMF) | |
| Net Yield (As at current date) | 12.84% 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 | 59 | 9.75% | 9.91% |
| 31-Oct-19 | 94 | 9.60% | 9.84% |
| 16-Jan-20 | 171 | 10.35% | 10.88% |
| 28-May-20 | 304 | 10.25% | 11.21% |
| 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 | 63.37 (+0.41% 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) | 27,950.36 (+0.11% d/d; -11.07 ytd) |
| Market Capitalisation (₦’Trillion) | 13.62 |
Financial Markets Update – 26 JULY 2019
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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.
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