Financial Markets Today
U.S. equities rallied for a third consecutive trading day today, on renewed positive sentiments of global trade tensions, after reports that the U.S. could delay earlier announced tariffs on imports from Mexico, set to commence 10 June. This comes as the U.S. Federal Reserve is set to meet later this month, with increasing market analysts sentiments for a possible rate cut sooner than previously expected. The Dow Jones Industrial Average (DJIA), S & P 500 and NASDAQ indices all gained ca +0.97, +0.61 and +0.53%.
We expect current positive sentiments to be sustained in the short term. However, we do not expect the U.S. Federal Reserve Bank to be in a rush to make changes to its current rate stance at 2.25% – 2.50% at its next meeting on 18 – 19 June, with a close watch on rising expectation of a higher negative impact of current global trade war on economic growth, even in Developed Economies (DMs) like the U.S.
MONEY MARKETS
CAPITAL MARKETS
FOREIGN EXCHANGE
COMMODITIES
Banking system liquidity opened positive today at ca ₦291.56bn lower than ca ₦510.06bn recorded on Monday. The Central Bank of Nigeria (CBN) conducted an Open Market Operation (OMO) auction today to mop up the excess liquidity.
Treasury Bills
The treasury bills secondary market was bearish today, fresh off the back of a 2-day holiday, as market reacted to another Open Market Operation (OMO) auction conducted by the Central Bank (CBN). Average rates gained ca +18bps day-on-day, with the 19 September 2019 maturity closing at 12.50% from 12.06%. Please find below details of the OMO auction:
| Tenor | 98-Days | 175-Days | 364-Days |
| Maturity Date: | 12-Sep-19 | 28-Nov-19 | 04-Jun-20 |
| Amount Offered: | ₦20.000 billion | ₦30.000 billion | ₦120.000 billion |
| Subscription | ₦0.071 billion | ₦2.130 billion | ₦155.830 billion |
| Amount Allotted: | ₦0.071 billion | ₦2.130 billion | ₦155.780 billion |
| Range of bids | 11.3500% – 11.4000% | 11.6300% – 11.6300% | 12.4200% – 12.5000% |
| Stop Rate | 11.4000% | 11.6300% | 12.4800% |
Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded higher day-on-day at 8.29% and 9.21% from 9.29% and 10.21%, with improved interbank liquidity. 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
A relatively quiet session in the bonds secondary market today, with most of the activities at the mid-to-long end of the curve. Average yields gained ca +17bps day-on-day, with February 2028 maturity closing at 14.50% from 14.26%.
Eurobond
The nation’s Eurobonds market traded on a very bullish note today, with investors having a positive outlook on emerging markets. Average yields shed ca -21bps day-on-day with the February 2038 maturity closing at 8.18% from 8.42%.
Equities
The Nigerian equities market commenced the week negative today, with the Nigerian Stock Exchange All Share Index (NSE ASI) shedding ca -1.30% day-on-day to close at 30,527.07pts, while the market’s year-to-date returns declined to -2.87%. This was largely due to losses in Guinness Nigeria Plc (-2.06%) and Guaranty Trust Bank Plc (-1.92%).
The NSE Banking, Consumer goods and Industrial indices lost ca -66bps, -9bps and -280bps respectively, while the Oil & Gas index gained ca +203bps. Guaranty Trust Bank Plc led both the volume and charts with 82.82m units traded at ca ₦2.59bn..
The Naira remained flat against the dollar in both the interbank and parallel markets at ₦306.90/$1 and ₦361/$1 respectively. It also remained stable against the Euro at ₦402/€1 and the Pound sterling at ₦465/₤1, in the parallel market. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate depreciated day-on-day at ₦360.44/$1 from ₦360.39/$1.
Crude oil prices rallied today shaking off losses from the beginning of the week, as market reacted to a report that the U.S. may delay sanctions on Mexico which were supposed to commence next week Monday, 10 June. Brent crude oil price gained ca +1.96% day-on-day at $61.82pb, while WTI gained ca +2.07% day-on-day at $52.72pb, as at report time. Spot gold gained ca +0.3449% at $1,338.20 per ounce.
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| Benchmark T-Bills Discount Rates | ||||
| 06-Jun-19 | 03-Jun-19 | Change in Rates | ||
| 91 Days . | 12.27% | 12.12% | 0.15% | |
| 182 Days- | 12.10% | 12.08% | 0.02% | |
| 357 Days. | 12.45% | 12.20% | 0.25% | |
| Source: FMDQ DQL for 06 June 2019 *T-Bills Discount Rates are slightly different from current market rates |
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| Benchmark FGN Bond Yields | ||||
| 06-Jun-19 | 03-Jun-19 | Change in Yield | ||
| 3 yrs: 16.00% 15-Jul-2021 | 14.26% | 14.26% | 0.00% | |
| 5 yrs: 15.54% 27-Apr 2023 | 14.33% | 14.33% | 0.00% | |
| 10 yrs: 13.98% 17 Mar 2027 | 14.50% | 14.26% | 0.24% | |
| 20 yrs: 16.25% 18-Apr 2037 . | 14.54% | 14.54% | 0.00% | |
| Source: FMDQ DQL for 06 June 2019 | ||||
| Benchmark FGN EuroBond Yields | ||||
| 06-Jun-19 | 03-Jun-19 | Change in Yield | ||
| 3 yrs: NGERIA 6 3/4 01/28/21 | 4.77% | 4.98% | -0.21% | |
| 5 yrs: NGERIA 6 3/8 07/12/23 | 5.56% | 5.75% | -0.19% | |
| 10 yrs: NGERIA 6 1/2 11/28/27 | 7.26% | 7.46% | -0.20% | |
| 20 yrs: NGERIA 7.696 02/23/38 | 8.18% | 8.42% | -0.24% | |
| 30 yrs: NGERIA 9.248 01/21/49 | 8.73% | 8.98% | -0.25% | |
| Source: FMDQ DQL for 06 June 2019 | ||||
| AIICO Money Market Fund (AMMF) | |
| Net Yield (As at current date) | 13.19% 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 | 56 | 9.65% | 9.80% |
| 17-Oct-19 | 133 | 12.10% | 12.66% |
| 07-Nov-19 | 154 | 11.60% | 12.20% |
| 16-Jan-20 | 224 | 12.00% | 12.95% |
| Select Macro-economic Indices | |
| Inflation % (April 2019) | 11.37 (+1.07% ytd) |
| PMI (May 2019) | 57.80 |
| MPR (%) | 13.5 (-5%/+2% around mid-point) |
| CRR (%) | 22.5 |
| Brent Crude Price US$ pbbl | 60.57 (-0.10% d/d) |
| External Reserve (US$’billion) | 45.139 (+1.84% ytd) |
| GDP % (Q4 2018) | +2.01% (Q4 2018: +2.38% y/y) |
| NSE All Share Index (ASI) | 31,527.07 (-1.30% d/d; -2.87% ytd) |
| Market Capitalisation (₦’Trillion) | 13.44 |
Financial Markets Update – 06 June 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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