Re: FINANCIAL MARKETS TODAY – 15 September 2021

The National Bureau of Statistics (NBS) confirmed in its monthly report, the nation’s fifth consecutive month of disinflation, with the Consumer Price Index (CPI), which measures inflation settling at 17.01% year-on-year in August 2021 vs 17.38% recorded in July 2021. The Food and Core sub indices both grew at slower rates in the month, settling at 20.30% and 13.41% year-on-year in August 2021 from 21.03% and 13.72% respectively, in July 2021. This is attributable to the persistent decrease in food prices.

We expect continued disinflation in the near term, due to the high base-effect of last year.

FIXED INCOME MARKET

Money Markets                                                                                

Interbank system liquidity saw some improvement today, opening with a balance of ca ₦64.56 billion, higher than previous day’s opening deficit of ca ₦94.47billion. Thus, the Open Buy Back (OBB) and Overnight (ON) rates trended lower to settle at 13.00% and 13.55% from 14.00% and 14.50% respectively, the previous day.

Treasury Bills                                                                  

Activity in the NTB secondary market was subdued today as investors anticipated the result of the Primary Market Auction (PMA) conducted today.  However, some offers were witnessed on the July 2022 and September 2022 papers at 7.50% levels.  

Bonds  

The FGN bonds secondary market sustained its bearish stance today, with offers seen on the 2028, 2035, 2036, 2049 and 2050 maturities at 11.85%, 13.00%, 13.15%, 13.18% and 13.40% respectively. However, bids were scarce, ensuring only few trades were executed. Overall, average yields rose ca 13bps, day-on-day.

The Debt Management Office (DMO) released the Federal Government of Nigeria (FGN) bond issuance circular for the September 2021 bond auction, with the DMO offering ₦50 billion each on the February 2028, March 2036 and March 2050 maturities.

Eurobonds

The Eurobonds space was relatively quiet today, however some demand was seen on selected maturities on the yield curve. Overall, average yield lost ca 1bp, day-on-day.

Equities Market Performance

The Nigerian equities market closed the day in the green as the Nigerian Stock Exchange All Share Index (NSE ASI) gained 0.12% day-on-day to close at 39,968.34pts, while market year-to-date loss reduced to -3.23%. This was largely supported by gains in Oando Plc (+6.21%).

The NSE Oil and Gas and Banking indices lost ca 2.00% and 0.39% respectively, while the NSE Industrial Goods and Consumer Goods indices remained flat, day-on-day.

Universal Insurance Plc led the volume chart with ca 17.99 million units while MTN Nigeria Communications Plc led the value chart with ca ₦1.01 billion worth of trades.

Foreign Exchange

In the parallel market, the Naira depreciated against the U.S Dollar and Euro to ₦562.00/$1.00 and ₦648.00/€1.00 from ₦557.00/$1.00 and ₦645.00/€1.00 respectively, while remaining flat against the Pound Sterling at ₦760.00/₤1.00 yesterday. FMDQ Nigerian Autonomous Foreign Exchange Fixing (NAFEX) appreciated to ₦412.06/$1.00 from ₦412.08/$1.00.

Commodities

Global crude oil prices sustained its upward trajectory, as the American Petroleum Institute (API) reported a drop of 5.4 million barrels (mb) of U.S crude inventory, higher than market analysts’ expectation of a 3.5mb drop. Therefore, Brent Crude oil price gained ca 3.08% day-on-day to settle at $75.87b, while WTI also rose ca 3.48% to $72.90pb, as at report time. Spot Gold lost ca 0.69% day-on-day to settle at $1,794.70 per ounce as at report time.

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