Financial market update

08 August 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Although hampered by the poor state of infrastructure in the country, analysts have said that the non-oil sector will continue to be the major driver of the GDP in the country. Analysts at First Security Discount House in a half- year report made available said, “We expect the trend to continue in the second half of 2012, with agriculture, wholesale and retail trade leading the growth. The huge opportunities that still exist in voice and data telecommunication industry will continue to attract investment into the sector.

US: The Standard & Poor’s 500 Index rose to the highest level since April, commodities gained and the yen weakened amid better-than-estimated corporate earnings and speculation central banks will boost efforts to lift growth. The S&P 500 advanced 0.9 percent at 12:54 p.m. in New York yesterday. The Stoxx Europe 600 Index added 0.8 percent to reach a four- month high.

INDIA: Indian stocks rose to the highest in a month amid optimism the government will take measures to boost economic growth when parliament resumes this week, and as Germany backed the European Central Bank’s bond-buying plan. The BSE India Sensitive Index, or Sensex, advanced 1.1 percent to 17,601.78 at the close yesterday, the highest level since July 10. German Chancellor Angela Merkel’s government supported the ECB’s bond-buying plan announced last week, a spokesman said, easing concerns the latest measures to contain the debt crisis may fail to calm euro-area turmoil.

Bonds – A change in direction on bond yields on Tuesday as liquidity condition worsens, demand expected to remain weak irrespective of any short term buying interest from corporate clients, impact of the negative carry at this level is discouraging banks from any add-on to the portfolio.

Bills – Market remained volatile yesterday as yields reacted to the rediscounting rates announced by the central bank on Monday. This correction was expected given the fact that market should align to the indicative pricing shown to market by the CBN, yields expected to trend higher in the coming session due to tight liquidity condition and rising lending rates.

Money Market – Cash market remained illiquid yesterday, lending rates trend higher closing at an all- year high of 21% on OBB and 24% on O/N rate. Rates expected to close higher in today’s session when banks fund their WDAS FX trades which implies all the pressure will be on the interbank market as banks will not be able to access the CBN SLF window for any fund.

Hi          Low          Close          Prev.Close
    161.75/85    161.45/55     161.50/60     161.65/75

NIBOR (%)                       LIBOR (%)
O/N                22.3750         USD 1 month        0.2413
7 Day              22.8333         USD 2 month       0.3348
30 Day           23.0417          USD 3 month       0.4379
60 Day           23.3750          USD 4 month      0.5444
90 Day           23.6250          USD 6 month      0.7232
USD 12 month     1.0472
Y/Y Consumer Inflation June 2012 :                 12.9%
FX Reserves: 03 August 2012 (USD bn)           36.579
MPR                                                                          12.00%
Source: FMD and CBN


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