Financial Markets Today

Financial Markets Today

All of us at AIICO Capital wish you all the Happiness in the New Year.

Global financial markets enjoyed a 2nd consecutive positive trading day, after yesterday’s dovish tone of the U.S. Federal Reserve Bank in pledging to be patient in raising its benchmark interest rate further, while maintaining it at 2.25% – 2.50% at the close of its meeting. Most benchmark equity indices gained day-on-day as the price of Gold rose to its highest since April 2018, further lifting the gains recorded in the month of January. Benchmark equity indices gained day-on-day, with the U.S. Dow Jones Industrial Average (DJIA), S & P 500, NASDAQ and FTSE all gaining ca +0.16%, +0.86%, +1.37% and +0.39% respectively, to close the month of January 2019 with gains of +7.06%, +7.70%, +9.79% and +3.58% respectively. Global commodity prices also appreciated month-on-month, with both Brent crude oil price and Gold gaining ca +15% and +3.44% respectively.

We expect the U.S. Federal Reserve Bank (Fed) to maintain its current dovish monetary stance in the near term, on the back of possible slowdown in economic growth in the U.S. in 2019. We also expect other Central Banks of developed economies to take a cue from the hold-off stance of the U.S. Fed and keep monetary policies unchanged in the near term.

MONEY MARKETS

CAPITAL MARKETS

FOREIGN EXCHANGE

COMMODITIES

Banking system liquidity opened on a positive note today, at ca ₦541.68bn. There was an Open Market Operation (OMO) auction conducted by the Central Bank of Nigeria (CBN) today, in line with its current tight monetary stance.

Treasury Bills
A very bullish trading day in the treasury bills secondary market, with demand seen at the short end of the curve. Average rate lost ca -20ps day-on-day, with the 07 February and 07 March 2019 maturities trading the most to close at 13.64% and 11.71%. Pease find below a summary of the results of today’s Primary Market (PMA) auction:

Tenor 112-Days 203-Days 364-Days
Maturity Date: 23-May-19 22-Aug-19 30-Jan-20
Amount Offered: ₦ 50.00billion ₦ 150.00billion ₦ 350.00 billion
Subscription: ₦ 82.96billion ₦ 46.62billion ₦270.97 billion
Amount Allotted: ₦ 82.96billion ₦ 46.62billion ₦ 270.97 billion
Range of bids: 11.7500% – 11.9000% 13.5000% – 15.0000% 15.0000% – 15.0000%
Stop Rates 11.9000% 13.5000% 15.0000%


Bank Placements

Open Buy Back (OBB) and Overnight (O/N) rates rose to 10.29% and 11.36% from 3.83% and 4.50%. 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 active day in the bonds secondary market today, with activities focused on the February 2028 maturity. Average yields declined ca -8bps day-on-day, with the February 2028 maturity trading the most to close at 15.20% from 15.39%.

Equities
The Nigerian equities market declined for a 4th consecutive trading day, largely due to price depreciation in highly capitalized stocks as Dangote Cement Plc (-2.06%), Guaranty Trust Bank Plc (-1.62%), Nigerian Breweries Plc (-5.13%), Zenith Ban Plc (-2.17%) and Stanbic IBTC Holdings Plc (-3.83%). This pulled own the Nigerian Stock Exchange All Share Index (NSE ASI) which lost ca -1.89% day-on-day to close at 30,557.20pts, with market’s year-to-date returns at -2.78%.

The NSE Banking, Oil & Gas and Industrial indices gained ca +10bps, +140bps and +23bps day-on-day, while the NSE Consumer Goods index declined -76bps. United Bank for Africa Plc led both the volume and value charts with 123.71m units traded at ₦859.28mn.

The Naira remained stable against the dollar at the interbank market window today, at ₦306.75/$1. In the parallel market, it appreciated against the Dollar at ₦361/$1 from ₦363/$1, depreciated against the Pound Sterling at ₦472/₤1 from ₦469/₤1, while remaining stable against the Euro at ₦411/€1. The Naira depreciated further at the Nigerian Autonomous Foreign Exchange (NAFEX) window at ₦362.71/$1 from ₦362.68/$1.

Crude oil prices rose for a 3rd consecutive day today, buoyed by continued impact of expected reduced supply from Venezuela on sanctions imposed by the U.S. Brent crude oil price rose ca +0.71% at $62.09pb, while WTI crude also rose ca +1.57% at $55.08pb, as at report time. Spot gold was up ca +0.76% day-on-day at $1,325.70 per ounce.

Top 5 Equitiy Advancers
Name (Symbol) Closing Price Gain(N) % Change
MCNICHOLS 0.33 0.03 +10.00%
SUNUASSUR 0.22 0.02 +10.00%
LEARNAFRCA 1.37 0.11 +8.73%
VITAFOAM 4.80 0.30 +6.67%
WEMABANK 0.65 0.03 +4.84%
Top 5 Equity Decliners
Name (Symbol) Closing Price Gain(N) % Change
REDSTAREX 5.00 -0.50 -9.09%
FIRSTALUM 0.32 -0.03 -8.57%
NIGERINS 0.22 -0.02 -8.33%
HONYFLOUR 1.20 -0.10 -7.69%
JBERGER 26.00 -2.00 -7.14%
Benchmark T-Bills Discount Rates
31-Jan-19 30-Jan-19 Change in Rates
77Days 11.48% 11.95% -0.47%
168Days 12.96% 13.23% -0.27%
315Days 14.90% 14.90% 0.00%
Source: FMDQ DQL for 31 January 2019
*T-Bills Discount Rates are slightly different from current market rates
Benchmark FGN Bond Yields
31-Jan-19 30-Jan-19 Change in Yield
3 yrs: 16.00% 29-Jun 2019 13.63% 13.55% 0.08%
5 yrs: 15.54% 13-Feb 2020 15.22% 15.41% -0.19%
10 yrs: 16.29% 17 Mar 2027 15.18% 15.18% 0.00%
20 yrs: 16.25% 18-Apr 2037 15.09% 15.09% 0.00%
Source: FMDQ DQL for 31 January 2019
AIICO Money Market Fund (AMMF)
Net Yield (As at current date) 13.15% 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
28-Feb-19 27 11.80% 11.90%
21-Mar-19 48 10.70% 10.85%
01-Aug-19 181 13.00% 13.90%
07-Nov-19 279 14.45% 16.24%

 

Select Macro-economic Indices
Inflation % (December 2018) 11.44 (-25.57% ytd)
PMI (December 2018) 61.10
MPR (%) 14 (-5%/+2% around mid-point)
CRR (%) 22.5
Brent Crude Price US$ pbbl 62.09 (+0.71% d/d)
External Reserve (US$’billion) 43.16 (+0.11% ytd)
GDP % (Q3 2018) +1.81% (Q2 2018: +1.50% y/y)
NSE All Share Index (ASI) 30,557.20 (-1.89% d/d; -2.78% ytd)
Market Capitalisation (₦’Trillion) 11.39
 Financial Markets Update – 31 January 2019
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