16 May 2017, Sweetcrude, Houston — The local and international financial market products and services update.
NIGERIA: From being the worst performing market among its emerging market peers, the Nigerian equities market has made record gains for three weeks in a row, surging by 11.9%, following renewed demand for stocks by foreign portfolio and domestic investors on the back of introduction of the new foreign exchange window for investors and exporters by the Central Bank of Nigeria (CBN).
In a bid to boost liquidity in the forex market, the CBN introduced the window last April that allows market participants to determine the exchange rate of the naira on a willing buyer, willing seller basis. But to promote liquidity and professional market conduct, the central bank may from time to time participate in the market.
FX: Last week, the CBN conducted two FX auctions (one wholesale and one retail) with $100m as the amount on offer for the wholesale auction. According to reports, the entire $100m placed on offer was sold to the markets. We are yet to get results of FX sold for the retail auction.
FIXED INCOME: Friday had a slow close to a relatively active week, there wasn’t a lot of price action and traded volume was also low for both t-bills and bonds. CBN sold a total 17bn OMO bills at unchanged stop rates. There are still pockets of demand from fund managers for both bills and bonds, giving support to both markets. Money Market is short about 40bn as at Friday following FX sale debits.
CHINA: China’s growth took a step back in April after a surprisingly strong start to the year, as factory output to investment to retail sales all tapered off as authorities clamped down on debt risks in an effort to stave off a potentially damaging hit to the economy.
Waking up to the systemic threat posed by cheap credit-fueled stimulus since the 2008-9 global financial crisis, Beijing has continued to tighten the screws on speculative financing over the past several months.
Data on Monday highlighted the broad economic impact of these regulatory curbs, with below-forecast factory output in April and fixed-asset investment in the first four months of the year reinforcing evidence of a weakening manufacturing sector and slowing momentum in the world’s second-biggest economy.
U.K: Britons face a “rockier” labour market in the coming years that’s going to limit an improvement in wage growth, according to EY Item Club.
The forecasts published Monday are in contrast to the medium-term outlook presented by Mark Carney last week. While the Bank of England governor warned of a “challenging” 2017 for workers as inflation outpaces pay gains, the BOE sees a pickup from later this year, with wages growing close to 4% in 2019. In contrast, EY sees “negligible” real wage gains with nominal improvements of less than 3% right through 2020.
COMMODITIES: Saudi Arabia and Russia said they favour prolonging oil output cuts by global producers through the end of the first quarter of 2018, setting a firmer time frame for a likely extension of the curbs into next year. Crude prices jumped.
Extending the curbs at already agreed-upon volumes is needed to reach the goal of reducing global inventories to the 5-year average, the energy ministers of the world’s biggest oil producers said in a joint press conference in Beijing. They will present their position ahead of a meeting between OPEC and other nations that are part of the agreement later this month in Vienna.
Macro Economic Indicators
Inflation rate (Y-o-Y) for March 2017 17.26%
Monetary Policy Rate current 14.00%
FX Reserves (Bn $) as at May 12, 2017, 30.878
Money Market Highlights
30 Day 19.4941
90 Day 21.4929
180 Day 23.8241
USD 1 Month 0.99244
USD 2 Months 1.07778
USD 3 Months 1.17956
USD 6 Months 1.43656
Tenor Maturity Yield (%)
91d 10-Aug-17 19.41
182d 09-Nov-17 19.73
364d 03-May-18 22.50
2y 12-Apr-19 17.28
3y 12-Apr-20 16.26
5y 27-Jan-22 16.09
Indicative Currency Exchange Rates
USDNGN 314.50 315.00
EURUSD 1.0934 1.1136
GBPUSD 1.2791 1.2294
USDJPY 113.62 113.65
USDCHF 0.98645 0.9966
GBPEUR 1.1578 1.1784
USDZAR 13.0378 13.2418
JPYNGN 2.7197 2.8203
CHFNGN 316.82 318.51