Financial Markets Today
U.S Treasury yields today dropped to 19-month low today, with the 10yr benchmark bond declining to ca 2.269%, its lowest since October 2017, on continued rising fears of further escalation of ongoing U.S./China trade tensions. This comes of the back of comments by the U.S. President – Donald Trump indicating the trade war between the world’s 2 largest economies would run for a long period, with possible substantial increase in current tariffs by the U.S. on Chinese imports, and further raising fears of a slowdown in global economic growth for 2019.
With the trade tension showing no impending end in the near term as both the U.S and China continue to hold off negotiations, we expect risk-off sentiments on global risk assets to persist, particularly in emerging markets and for continued rise in investors’ demand for safe haven assets in Developed Economies (DMs).
MONEY MARKETS
CAPITAL MARKETS
FOREIGN EXCHANGE
COMMODITIES
Banking system liquidity opened positive today at ca ₦155.9bn higher than ca ₦99.8bn recorded yesterday, as Banks had no major funding requirements. The Central Bank of Nigeria (CBN) did not conduct an Open Market Operation (OMO) auction today.
Treasury Bills
Another quiet session in the treasury bills secondary market today, with some sell offs at the long-end of the curve. Average rates marginally gained ca +1bps day-on-day, with the 29 August 2019 maturity trading the most to close at 10.80% from 10.78%. There will be a Primary Market Auction (PMA) on Thursday with ca ₦67.37bn Please find below our expectation for the auction:
| S/N | AUCTION DATE | TENOR | AMOUNT OFFERED
(NGN) |
LAST STOP RATE (NGN) |
EXPECTED STOP RATE RANGE |
| 1 | 30-May-19 | 91-Day | 24,372,790,000.00 | 10.00% | 10.50%-10.75% |
| 2 | 30-May-19 | 182-Day | 23,157,656,000.00 | 12.30% | 11.75%-12.00% |
| 3 | 30-May-19 | 364-Day | 19,842,352,000.00 | 12.49% | 11.90%-12.15% |
Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded lower day-on-day at 12.00% and 13.43% from 14.50% and 15.29%, 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 quiet day in the bonds secondary market today, with very few transactions across the curve. Average yields marginally shed -2bps day-on-day, with July 2021 maturity closing at 14.43% from 14.44%.
Eurobond
A bearish trading session in the nation’s Eurobonds market today, with sell offs on most maturities as market continues to express risk off sentiments towards emerging markets on lingering U.S./China trade tensions. Average yields gained ca +3bps day-on-day with the January 2049 maturity closing flat at 8.70% from 8.67%.
Equities
The Nigerian equities market closed positive today, with the Nigerian Stock Exchange All Share Index (NSE ASI) gaining ca +3.68% day-on-day to close at 31,307pts, with the market’s year-to-date returns at -0.39%. This was largely due to gains in Zenith Bank Plc (+9.11%), Guaranty Trust Bank Plc (+5.43%) and Dangote Cement Plc (+5.00%).
The NSE Banking, Consumer goods, Industrial and Oil & Gas all gained ca +676bps, +224bps, +342bps and +397bps respectively. Guaranty Trust Bank Plc led both the volume and value charts with ca 67.12m units worth ₦2.14bn.
The Naira remained flat against the dollar in both the interbank and parallel markets at ₦306.90/$1 and ₦361/$1 respectively. It appreciated against the Euro at ₦403/€1 from ₦403/€1 but was stable against the Pound sterling at ₦465/₤1, in the parallel market. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate depreciated day-on-day at ₦360.39/$1 from ₦360.38/$1.
Crude oil prices marginally gained today, despite lingering concerns that the escalating U.S./China trade tensions an expectation of its negative impact on crude oil demand in 2019. Brent crude oil price gained ca +0.27% day-on-day at $70.30pb, while WTI gained ca +0.74% day-on-day at $59.37pb, as at report time. Spot gold lost ca -0.483% at $1,277.40 per ounce.
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| Benchmark T-Bills Discount Rates | ||||
| 28-May-19 | 27-May-19 | Change in Rates | ||
| 86 Days . | 11.17% | 11.24% | -0.07% | |
| 177 Days- | 11.73% | 11.67% | 0.06% | |
| 338 Days. | 11.55% | 11.60% | -0.05% | |
| Source: FMDQ DQL for 28 April 2019 *T-Bills Discount Rates are slightly different from current market rates |
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| Benchmark FGN Bond Yields | ||||
| 28-May-19 | 27-May-19 | Change in Yield | ||
| 3 yrs: 16.00% 15-Jul-2021 | 14.43% | 14.44% | -0.01% | |
| 5 yrs: 15.54% 27-Apr 2023 | 14.29% | 14.36% | -0.07% | |
| 10 yrs: 13.98% 17 Mar 2027 | 14.37% | 14.25% | 0.12% | |
| 20 yrs: 16.25% 18-Apr 2037 . | 14.45% | 14.45% | 0.00% | |
| Source: FMDQ DQL for 28 April 2019 | ||||
| Benchmark FGN EuroBond Yields | ||||
| 28-May-19 | 27-May-19 | Change in Yield | ||
| 3 yrs: NGERIA 6 3/4 01/28/21 | 4.85% | 4.83% | 0.02% | |
| 5 yrs: NGERIA 6 3/8 07/12/23 | 5.58% | 5.57% | 0.01% | |
| 10 yrs: NGERIA 6 1/2 11/28/27 | 7.14% | 7.09% | 0.05% | |
| 20 yrs: NGERIA 7.696 02/23/38 | 8.14% | 8.10% | 0.04% | |
| 30 yrs: NGERIA 9.248 01/21/49 | 8.70% | 8.67% | 0.03% | |
| Source: FMDQ DQL for 28 April 2019 | ||||
| AIICO Money Market Fund (AMMF) | |
| Net Yield (As at current date) | 13.23% 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 | 65 | 9.25% | 9.40% |
| 17-Oct-19 | 142 | 11.35% | 11.87% |
| 07-Nov-19 | 163 | 11.30% | 11.90% |
| 16-Jan-20 | 233 | 11.40% | 12.29% |
| 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 | 70.30 (+0.27% d/d) |
| External Reserve (US$’billion) | 45.068 (+2.12% ytd) |
| GDP % (Q4 2018) | +2.01% (Q4 2018: +2.38% y/y) |
| NSE All Share Index (ASI) | 31,307.00 (+3.68% d/d; -0.39% ytd) |
| Market Capitalisation (₦’Trillion) | 13.79 |
Financial Markets Update – 28 MAY 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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