FINANCIAL MARKETS TODAY – 23 November 2021

FIXED INCOME MARKET

The Monetary Policy Committee (MPC) concluded its final policy meeting for the year, retaining all key policy rates – The Monetary Policy Rate (MPR), Cash Reserve Ratio (CRR) and Liquidity ratio at 11.50%, 27.50% and 30.00% respectively while maintaining the asymmetric corridor around the MPR at +100/–700 basis points.  Key considerations by the MPC in retaining key policy rates were the nation’s positive economic growth – recording a Gross Domestic Product (GDP) growth of +4.03% Y-o-Y in Q3 2021, and a 6th consecutive decline in headline inflation to 15.99% Y-o-Y in October 2021.

We expect the monetary authorities to maintain its accommodative stance in the near term, to boost economic and manufacturing activities.

Money Markets                                                                                 

Interbank system liquidity improved today as inflows of ca ₦60.20 billion from Open Market Operations (OMO) maturities hit the system. Nevertheless liquidity balance opened in a deficit of ca ₦69.74 billion, albeit better than the previous day’s opening deficit of ca ₦258.72 billion. Thus, the Open Buy Back (OBB) and Overnight (ON) rates trended lower to 15.00% and 16.02% from 16.33% and 17.00% respectively, on Monday.

Treasury Bills    

The NTB secondary market was quiet today, ahead of the Primary Market  Auction (PMA) scheduled to hold tomorrow. Overall, average rates remained relatively flat at 4.86%.

Bonds  

Bearish sentiments were seen in the FGN bonds secondary market today, with the 2037 and 2050 maturities offered at 13.00% and 13.28% respectively.  However, traded volumes were very weak amid tight system liquidity. Overall, the average yield rose ca 4bps, day-on-day at 11.37%.

Eurobonds

The Eurobonds space was largely bearish, with selloffs seen across the sovereign curve. Overall, average yield rose by ca 28bps, day-on-day to 7.29%.

Equities

Following price declines in bellwethers stocks such as United Bank for Africa (-0.61%) and Guaranty Trust Holding Company Plc (-0.20%), the Nigerian Equities market closed marginally lower as the Nigerian Stock Exchange All Share Index (NGX ASI) lost 0.01% day-on-day to close at 43,255.14pts, while year-to-date return dropped to +7.41%.

The NSE Banking index gained ca 0.21%, the NSE Oil and Gas and Consumer Goods indices lost ca 0.20% and 0.01% respectively, while the NSE industrial index closed flat day-on-day.

Guaranty Trust Holding Company Plc led both the volume and value charts with ca 36.19 million units and ca ₦919.63 billion worth of trades.

Foreign Exchange

FMDQ Nigerian Autonomous Foreign Exchange Fixing (NAFEX) appreciated to ₦414.80/US$1.00 from ₦415.07/US$1.00.

Commodities

Global crude oil prices extended gains today, despite the reports that the United States plans to tap into its strategic petroleum reserve as part of a global effort from energy consuming nations to calm 2021’s rapid rise in fuel prices. Thus, Brent Crude oil price gained ca 2.07% day-on-day to settle at US$81.35pb, while WTI also gained ca 1.60% to US$77.96pb, as at report time. Spot Gold lost ca 1.11% day-on-day to settle at US$1,786.00 per ounce as at report time.

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