12 August 2016, Sweetcrude, Lagos — Local and international financial market products and services update.
NIGERIA: Nigeria will spend 100 billion Naira ($312.50 million) on capital projects in the coming days as part of the 2016 budget, Vice President Yemi Osinbajo said on Thursday, as the country tries to inject life into an economy facing recession.
Africa’s largest economy is in the middle of its worst crisis in decades, as a slump in oil revenues hammers public finances and the naira. Gross domestic product shrank 0.36% in the first quarter and the central bank governor has said a recession is likely.
Government capital spending so far has reached 332 billion Naira, Osinbajo said. The record budget has been held up for months by wrangling between President Muhammadu Buhari and parliament.
FX: NIFEX remains unchanged for the third day in a row at $/N 320.25. The closing range for yesterday is $/NGN 313.50 – 320.50.
FIXED INCOME: There was no CBN OMO action yesterday and it translated to more buying in the secondary market. T-Bill market was able to sustain the momentum but the bond market did not. With the bond auction coming up, there was just not enough demand/interest at sub 15% yield and we saw some slight sales to close. Bill market closed 53bps lower and bonds a marginal 4bps lower. We expect the CBN to come in today and mop up cash. The money market is now long N64bn with O/N rates down to 7%.
CHINA: China’s broadest measure of new credit increased less than expected, suggesting monetary authorities are more concerned about swelling financial risks than giving more of a boost to old growth engines.
Aggregate financing was 487.9 billion yuan ($73.4 billion) in July, compared with a median estimate of 1 trillion yuan in a Bloomberg survey of economists.New yuan loans stood at 463.6 billion yuan, versus a projected 850 billion yuan, the People’s Bank of China data showed Friday.
Curbing financial risks have increasingly become a policy priority after economic growth stabilised in the second quarter. The emphasis may reverse if a property market or factory output slump threatens the 6.5% growth goal.
U.K: With the Bank of England’s increased stimulus crushing government-bond yields, U.K. equities are becoming even more irresistible.
Companies in the FTSE All-Share Index return 3.8% in dividends, near an all-time high relative to 10-year gilts. Thanks to BOE Governor Mark Carney’s measures to support the domestic economy in the wake of the U.K.’s vote to leave the European Union, mega caps benefiting from a weaker pound are no longer the only drivers of the market. The country’s mid-cap companies have jumped to their highest levels in more than a year and small caps to a record.
COMMODITIES: Oil is heading for its biggest weekly advance since April amid speculation informal OPEC talks next month may lead to stabilisation measures after prices tumbled into a bear market.
Futures climbed as much as 1.6% in New York after surging 4.3% Thursday. Discussions with members of the Organization of Petroleum Exporting Countries and non-OPEC producers may include possible action to stabilise the market, Saudi Arabia’s Energy Minister Khalid Al-Falih said in a statement,according to media reports, including Reuters. Global markets will continue to rebalance this year, according to the International Energy Agency.
Macro Economic Indicators
Inflation rate (Y-o-Y) for June 2016, 16.50%
Monetary Policy Rate current 14.00%
FX Reserves (Bn $) as at Aug 08, 2016, 25.918
Money Market Highlights
30 Day 16.8486
90 Day 18.1319
180 Day 20.1021
USD 1 Month 0.5176
USD 2 Months 0.6328
USD 3 Months 0.8176
USD 6 Months 1.2037
USD 12 Months 1.06675
Tenor Maturity Yield (%)
91d 17-Nov-16 13.85
182d 16-Feb-17 16.45
364d 03-Aug-17 20.17
2y 30-May-18 17.37
3y 29-Jun-19 14.86
5y 15-Jul-21 14.77
Indicative Currency Exchange Rates
USDNGN 314.00 320.50
EURUSD 1.1052 1.1254
GBPUSD 1.2861 1.3063
USDJPY 102.06 102.09
USDCHF 0.96935 0.9795
GBPEUR 1.1520 1.1725
USDZAR 13.2950 13.4986
JPYNGN 3.1368 3.1604
CHFNGN 327.12 328.81
EURNGN 355.94 357.31
GBPNGN 413.70 415.10