Financial market update

19 April 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Nigeria’s economy will expand by 7.1% this year as rising commodity prices and increased oil production help to offset a slowdown in Europe, the International Monetary Fund (IMF) has said. The anticipated growth compares with 7.36% in 2011. Nigeria had recorded a Gross Domestic Product (GDP) growth of 6%, 7% and 8.4% , 2008, 2009 and 2010. The IMF, in its World Economic Outlook report released yesterday noted that Nigeria, the second-largest economy in the region, will probably expand 7.1% this year.

EUROPE: Surging unemployment rates from Spain to Italy and Greece are threatening efforts to quell the region’s debt crisis and keeping bond yields close to record premiums relative to benchmark German bunds.

Unemployment in Spain surged to almost 24 percent, pushing the euro-region level to 10.8 percent in February, the highest in more than 14 years. Italy’s rate is at 9.3 percent, the most since 2001, hampering efforts to spur economic growth. Deepening recessions in Italy and Spain contributed to a five-week slide in Italian and Spanish bonds as the shrinking tax base helped lead to both countries raising their deficit targets.

CHINA: China’s stocks rose the most in more than two months as investors speculated the government will ease monetary policy to boost the economy and the International Monetary Fund raised its forecasts for global growth. Jiangxi Copper Co. (600362) and China Shenhua Energy Co. advanced more than 2 percent on optimism an improving world economy will boost demand for commodities.

China Construction Bank Corp. (939) and Poly Real Estate Group Co. led a gauge of financial stocks to the third-largest gain among 10 industry groups. CSR Corp. jumped the most in three months after the Xinhua News Agency said the company will supply high-speed trains to Hong Kong.

Bonds – Demand for bonds remain weak with few trades recorded in the week, this is linked to tight liquidity in the cash market and further delay in the announcement of the March inflation figure, a new release date has been pushed till 23rd April 2012 just before the auction next week, we therefore expect a relatively stable trend on the bearish side into the new week.

Bills – Quiet session with few trades recorded on the new 1yr t-bill issued, the 1yr bill yield closed 21bps down on the day.

Money Market – OBB and O/N rate moved up 50bps and 100bps to 14.50% and 15.50% respectively, tight liquidity condition persists in the money market.

FX
                             Hi             Low            Close         Prev.Close
USD/NGN   157.60/70   157.20/30    157.20/30    157.38/48