Financial Markets Today
Global financial markets remained highly volatile today, with yields on government treasuries in developed economies (DMs) dropping to their lowest in 15-months on rising investors’ fears of global economic slowdown in 2019 and potential recessionary signals in the world’s largest economy – the U.S., after its yield curve inverted late last week and on the back of continued weak economic data from the U.S., China and the Eurozone. Yields on the U.S. 10yr treasury, German 10yr treasury, UK 10yr treasury and French 10yr treasury all declined to ca +2.377%, -0.083%, +1.003% and +0.2909% respectively, as global equities markets declined further on rising investors’ interest in safe-haven risk assets of DMs.
We expect continued volatility in the financial markets in the near term, with increasing investors’ interest in safe-haven assets of developed economies (DMs) on global economic slowdown in 2019 and rising expectation of a rate cut by the U.S. Federal Reserve Bank in the later part of 2019.
MONEY MARKETS
CAPITAL MARKETS
FOREIGN EXCHANGE
COMMODITIES
Banking system liquidity opened on a positive note today, at ca ₦68.612bn from previous day’s opening of ₦85.10bn. There was no Open Market Operation (OMO) auction today by the Central Bank of Nigeria (CBN), with market focus on today’s Bonds Primary Market Auction (PMA).
Treasury Bills
A less active trading day in the treasury bills secondary market today, despite yesterday’s reduction in the Monetary Policy Rate (MPR) by the Central Bank (CBN). Most of today’s activities was seen at the mid-end of the curve, with average rates losing ca -5bps day-on-day and the 20 June 2019 maturity trading the most to close at 10.91% from 11.22%.
Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates dropped day-on-day to 15.14% and 15.50% from 16.43% and 17.29%, respectively. 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
A relatively active trading day in the domestic bonds secondary market today, with investors’ focus on the Primary Market Auction (PMA) and most activities seen at the mid-end of the curve. Average yield lost ca -2bps day-on-day, with the February 2028 maturity trading the most to close at 14.10% from 14.31%. Please find below a summary of the result of today’s PMA:
| S/N | AUCTION DATE | MATURITY DATE |
AMOUNT OFFERED (NGN) |
AMOUNT ALLOTED (NGN) |
MARGINAL RATE |
| 1 | 27-Mar-19 | 27-Apr-23 | ₦40.00 billion | ₦3.80 billion | 13.5000% |
| 2 | 27-Mar-19 | 21-Mar-25 | ₦40.00 billion | ₦5.55 billion | 13.5000% |
| 3 | 27-Mar-19 | 28-Feb-28 | ₦20.00 billion | ₦20.00 billion | 13.5000% |
Eurobonds
Yield levels in the nation’s Foreign market rose today, with average yield gaining ca +8bps day-on-day, particularly the January 2049 maturity gaining ca +8bps day-on-day.
Equities
The Nigerian equities market depreciated today, with the Nigerian Stock Exchange All Share Index (NSE ASI) losing ca -0.67% day-on-day to close at 30,829.45pts, and market’s year-to-date returns at -1.91%. This was largely on the back of loses in Guaranty Trust Bank Plc (-3.74%) and Seplat Petroleum Development Company Plc (-1.82%).
The NSE Banking, Oil & Gas and Consumer Goods indices lost -98bps, -84bps and -39bps respectively, while the NSE Industrial indices gained ca +3bps. Zenith Bank Plc led both the volume and value charts with 27.93m units valued at ₦606.60mn.
The Naira remained stable against the dollar at the interbank market window today, at ₦306.95/$1. In the parallel market, it remained stable against the Dollar, Pound sterling and Euro at ₦360/$1, ₦475/₤1 and ₦406/€1, respectively. The Naira depreciated at the Nigerian Autonomous Foreign Exchange (NAFEX) window at ₦360.23/$1 from ₦360.16/$1.
Brent crude oil prices declined today, as data from the U.S. Energy Information Administration (EIA) showed a growth of 2.8 million barrels in Shale crude oil stockpiles week-on-week. Brent crude oil price lost ca -0.03% at $67.95pb, while WTI lost ca -0.85% at $59.43pb, as at report time. Spot gold lost ca -0.43% to $1,309.30 per ounce.
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| Benchmark T-Bills Discount Rates | ||||
| 27-Mar-19 | 26-Mar-19 | Change in Rates | ||
| 71Days . | 12.23% | 12.03% | 0.20% | |
| 162Days | 13.37% | 13.25% | 0.12% | |
| 337Days. | 12.82% | 12.89% | -0.07% | |
| Source: FMDQ DQL for 27 March 2019 *T-Bills Discount Rates are slightly different from current market rates |
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| Benchmark FGN Bond Yields | ||||
| 27-Mar-19 | 26-Mar-19 | Change in Yield | ||
| 3 yrs: 16.00% 15-Jul-2021 | 14.67% | 14.67% | 0.00% | |
| 5 yrs: 15.54% 27-Apr 2023 | 14.17% | 14.46% | -0.29% | |
| 10 yrs: 16.29% 17 Mar 2027 | 14.17% | 14.32% | -0.15% | |
| 20 yrs: 16.25% 18-Apr 2037 . | 14.14% | 14.13% | 0.01% | |
| Source: FMDQ DQL for 27 March 2019 | ||||
| Benchmark FGN EuroBond Yields | ||||
| 27-Mar-19 | 26-Mar-19 | Change in Yield | ||
| 3 yrs: NGERIA 6 3/4 01/28/21 | 5.00% | 4.89% | 0.11% | |
| 5 yrs: NGERIA 6 3/8 07/12/23 | 5.53% | 5.42% | 0.11% | |
| 10 yrs: NGERIA 6 1/2 11/28/27 | 6.73% | 6.65% | 0.08% | |
| 20 yrs: NGERIA 7.696 02/23/38 | 7.85% | 7.78% | 0.07% | |
| 30 yrs: NGERIA 9.248 01/21/49 | 8.34% | 8.26% | 0.08% | |
| Source: FMDQ DQL for 27 March 2019 | ||||
| AIICO Money Market Fund (AMMF) | |
| Net Yield (As at current date) | 13.71% 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 |
| 01-Aug-19 | 127 | 10.95% | 11.38% |
| 17-Oct-19 | 204 | 12.45% | 13.38% |
| 07-Nov-19 | 225 | 12.50% | 13.54% |
| 16-Jan-20 | 295 | 12.50% | 13.90% |
| Select Macro-economic Indices | |
| Inflation % (February 2019) | 11.31 (-1.14% ytd) |
| PMI (February 2019) | 57.10 |
| MPR (%) | 14 (-5%/+2% around mid-point) |
| CRR (%) | 22.5 |
| Brent Crude Price US$ pbbl | 67.70 (+0.73% d/d) |
| External Reserve (US$’billion) | 44.04 (+2.14% ytd) |
| GDP % (Q4 2018) | +2.38% (Q3 2018: +1.81% y/y) |
| NSE All Share Index (ASI) | 30.829.45 (-0.67% d/d; -1.91% ytd) |
| Market Capitalisation (₦’Trillion) | 11.59 |
Financial Markets Update – 27 March 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.
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