Financial market update

10 August 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Federal Executive Council has agreed to increase spending by 5% but reduce the fiscal deficit in the 2013 budget, Minister for Finance, Ngozi Okonjo-Iweala said on Wednesday. The budget will be sent to the Nigerian parliament next month and that the FEC agreed total 2013 budget spending of N4.929 trillion ($30.80 billion), an increase from the N4.697 trillion budgeted for 2012. The fiscal deficit and domestic borrowing would come down to 2.17% and N727.19 billion next year respectively, from 2.85% and 744.44 billion this year.

EUROPE: European stock futures dropped, indicating the Stoxx Europe 600 Index will snap a five-day rally, as worse-than-expected Chinese trade data added to evidence the global economy is slowing. U.S. index futures and Asian shares also declined. Futures on the Euro Stoxx 50 Index expiring in September fell 0.5 percent to 2,422 at 7:42 a.m. in London. The benchmark Stoxx 600 has gained 1.8 percent so far this week, its 10th successive weekly increase, amid better-than-estimated company earnings.

INDIA: Indian stocks dropped, paring a weekly gain for the benchmark index, amid concern a slowdown in Asia’s third-largest economy is deepening and as company earnings missed analysts’ estimates. The BSE India Sensitive Index, or Sensex, slid 0.1 percent to 17,545.79 at 11:05 a.m. in Mumbai, paring its weekly gain to 2 percent. India’s factory output in June slid for the third time in four months, government data showed yesterday. Ten out of 24, or 42 percent, of Sensex companies that have reported June-quarter earnings so far have trailed analyst estimates, data compiled by Bloomberg show.

Bonds – Mixed reaction on the bond curve on Thursday with divergent views traded on the buy and sell side, at this time expectation of higher yields maintained irrespective of market resistance in the face of realized losses.

Bills – Fairly illiquid session yesterday marked with a slowdown in the sell-off from previous sessions, this is due to the auction cut-off rates which surprised the market at lower levels given current lending rates and policy direction on interest rates. Yields however expected higher in the coming weeks as market settles and adapts to new lending levels.

Money Market – Lending rates finally eased to 15.00% on OBB and 16.00% on O/N, this is due to the inflow of a maturing t-bill in excess of ngn51 bio after funding for Wednesday’s t-bill auction, lending rate however not expected to settle at this levels as market funds for Wednesday’s FX auction on Friday and the CBN SLF window inaccessible. The NGN appreciated against the USD yesterday closing at 158.60/70 as players liquidate USD positions to raise liquidity.

Hi                  Low               Close            Prev.Close
USD/NGN   159.85/15     158.00/10    158.60/70     159.85/95

Interest rates
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market
Dealers Association Standard Chartered Bank Nigeria.

NIBOR (%)                      LIBOR (%)
O/N                27.5833        USD 1 month         0.2393
7 Day              28.2917        USD 2 month         0.3348
30 Day           29.0417        USD 3 month         0.4375
60 Day           29.3750        USD 4 month        0.5414
90 Day           29.7917         USD 6 month        0.7217
USD 12 month       1.0465
Y/Y Consumer Inflation June 2012 :                 12.9%
FX Reserves: 07 August 2012 (USD bn)           36.356
MPR                                                                          12.00%
Source: FMD and CBN

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