Financial Markets Today
Yields on U.S. treasury bonds rose to a 3week high today, after the release of the U.S. Q4 2018 GDP growth rate figure which showed a better-than-expected growth of +2.6% year-on-year (y/y) vs market analysts’ expectation of +2.4% y/y. This comes on the back of continued positive growth in personal consumption of +2.8%, non-residential investment of +6.2% and fixed investment growth of 3.9% in Q4 2018. Despite the quarter-on-quarter softening in economic growth, average yearly GDP growth rose to its highest in 3yrs at 3.1%, boosting investors’ optimism of economic growth in 2019, with the 10yr U.S. bond treasury yield rising to ca +2.713%.
We maintain our expectation of a more challenging year for global economic growth, with both U.S. and China expected to grow a slower paces in 2019, on the back of continued uncertainties of U.S./China trade tensions and expectation of lower crude oil demand vs 2018. We also expect this to keep the U.S. Federal Reserve Bank benchmark rate at current levels for a better part of 2019.
MONEY MARKETS
CAPITAL MARKETS
FOREIGN EXCHANGE
COMMODITIES
Liquidity in the banking system opened positive today, at ca ₦274.519bn. There was an Open Market Operation (OMO) auction conducted by the Central Bank of Nigeria (CBN) today.
Treasury Bills
Trading activities in the treasury bills secondary market closed on a bullish note today, due to the drop in stop rates at yesterday’s primary market auction and the recent lack of Open Market Operation (OMO) issuance by the Central Bank (CBN). Demand was seen particularly at the long end of the curve, as average rates dropped ca -18bps day-on-day, with the 26 September maturity trading the most to close at 12.54% from 12.61%. Please find below a summary of the results of the OMO auction held today:
| Tenor | 91-Days | 182-Days | 364-Days |
| Maturity Date: | 30-May-19 | 29-Aug-19 | 27-Feb-20 |
| Amount Offered: | ₦ 50 billion | ₦ 100.00 billion | ₦ 250.00 billion |
| Subscription: | ₦ 55.51 billion | ₦ 92.59 billion | ₦ 1,217.10 billion |
| Amount Allotted: | ₦ 55.51 billion | ₦ 92.59 billion | ₦ 927.75 billion |
| Range of bids: | 10.8500% – 11.9000% | 12.5900% – 13.5000% | 13.9000% – 15.0000% |
| Stop Rates | 11.9000% | 13.5000% | 14.3000% |
Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates dropped further to day-on-day to 13.17% and 14.25% from 9.50% and 10.58%. 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
Trading activities in the bonds secondary market was very bullish today, with demand seen particularly at the mid-to-long end of the curve. Average yield dropped ca -28bps day-on-day, with the February 2028 maturity trading the most to close at 13.91% from 14.39%.
Equities
The Nigerian equities market declined for a 3rd consecutive trading day today, with the Nigerian Stock Exchange All Share Index (NSE ASI) losing ca -1.63% day-on-day to close at 31,718.70pts, with market’s year-to-date returns at +0.92%. This was majorly due to price decline in Nestle Nigeria Plc (-2.00%), Guaranty Trust Bank Plc (-6.85%), Nigerian Breweries Plc (-4.45%) and Zenith Bank Plc (-4.02%).
The NSE Oil & Gas, Consumer Goods and Banking indices all lost ca -156ps, -202bps, and -456bps respectively, while the NSE Industrial gained ca +67bps. Guaranty Trust Bank Plc led both the volume and vale charts with 44.62m units traded at ₦1.64bn.
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 further at the Nigerian Autonomous Foreign Exchange (NAFEX) window at ₦361.13/$1 from ₦361.21/$1.
Crude oil prices traded mix today, after yesterday’s rally on the back of continued positive sentiments of output-cuts by the Organisation of Petroleum Exporting Countries (OPEC) vs continued rise in U.S. Shale output at ca 12.1 million barrels per day. Brent crude oil price declined ca -0.60% at $65.99pb, while WTI crude gained ca +0.23% at $57.07pb, as at report time. Spot gold lost ca -0.34% day-on-day at $1,316.70 per ounce.
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| AIICO Money Market Fund (AMMF) | |
| Net Yield (As at current date) | 13.28% per annum |
| Added Benefit | Personal accident insurance cover |
| AIICO Capital Guaranteed Income Note (GIN) Rates p.a. | |||||
| Amount (NGN) | 30 Days | 60 Days | 90 Days | 180 Days | 364 Days |
| 10,000,001 – 50,000,000 | 10.00 | 10.50 | 11.00 | 12.00 | 13.00 |
| 50,000,001 – 100,000,000 | 11.00 | 11.25 | 11.50 | 12.50 | 14.00 |
| 100,000,001 – 400,000,000 | 12.00 | 12.25 | 12.50 | 13.00 | 14.50 |
| Trading Treasury Bills Rates p.a. | |||
| Maturity Dates | Tenor (Days) | Discount Rate | Effective Yield |
| 21-Mar-19 | 21 | 7.95% | 7.99% |
| 09-May-19 | 70 | 9.60% | 9.78% |
| 01-Aug-19 | 154 | 10.70% | 11.21% |
| 07-Nov-19 | 252 | 12.75% | 13.98% |
| Select Macro-economic Indices | |
| Inflation % (January 2019) | 11.37 (-0.61% ytd) |
| PMI ( February 2019) | 57.10 |
| MPR (%) | 14 (-5%/+2% around mid-point) |
| CRR (%) | 22.5 |
| Brent Crude Price US$ pbbl | 65.99 (-0.60% d/d) |
| External Reserve (US$’billion) | 42.33 (-1.82% ytd) |
| GDP % (Q4 2018) | +2.38% (Q3 2018: +1.81% y/y) |
| NSE All Share Index (ASI) | 31,718.70 (-1.63% d/d; +0.92% ytd) |
| Market Capitalisation (₦’Trillion) | 11.83 |
Financial Markets Update – 28 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.
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