Financial market update

20 July 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Governor of the Central Bank of Nigeria, Mr. Lamido Sanusi, on Wednesday proposed a new banking model that would enable the country to address its infrastructure deficit. Specifically in a keynote address delivered at the third Public Private Partnership stakeholders forum in Abuja called for the creation of a new government owned bank that could raise tax-free bonds to fund projects.

US: U.S. stocks rose, sending the Standard & Poor’s 500 Index to a two-month high, amid better- than-estimated earnings and bets that disappointing economic data will lead the Federal Reserve to add stimulus. The S&P 500 rose 0.3 percent to 1,377.23 at 12:12 p.m. New York time yesterday. The benchmark stock gauge rose 1.4 percent over the previous two days amid optimism about earnings and expectations for government measures to stimulate the economy.

CHINA: The government said earlier this month it may expand rail spending to about 300 billion yuan ($47 billion) this half, after overhauling industry management following a crash that killed 40 people near the eastern city of Wenzhou last July. Premier Wen Jiabao has called for more investment to sustain an economy that has slowed for six consecutive quarters.

INDIA: Indian stocks climbed the most in more than a week amid speculation the government will revive its economic reform agenda after yesterday’s presidential polls. The BSE India Sensitive Index rose 0.6 percent to 17,278.85 at close yesterday, the most since July 10. Singh’s government has seen its agenda stymied by opposition from its own allies, including Banerjee’s Trinamool party, and last year suspended a plan to allow Wal-Mart Stores Inc. and other overseas companies to open supermarkets. An anti- corruption bill and proposals to allow foreign direct investment in aviation and pensions are also stalled.

Bonds – Trading activity on Thursday picked up in the bond market on the buy side just after the auction, though weak demand played out to higher cutoff rates at Wednesday’s auction. There seems to be renewed interest on bonds at this new yield levels with buying interest shown and trades executed around the 5yr – 20yr part of the curve.

Bills – Bullish run sustained across board in yesterday’s session, another 15 – 20bps off on yields in the bills market, new low levels are being set as the demand for bills just seem not to decline.

Money Market – OBB and O/N rate flat at 14.00% and 14.25%.

Fx
Hi                    Low              Close               Prev.Close
USD/NGN  161.90/00     161.35/45      161.70/80      161.35/45

NIBOR (%)                       LIBOR (%)
O/N                14.5417         USD 1 month          0.2468
7 Day              14.8750        USD 2 month          0.3393
30 Day           15.6667         USD 3 month         0.4531
60 Day           15.9167          USD 4 month         0.5511
90 Day           16.2500         USD 6 month         0.7279
USD 12 month       1.0645
Y/Y Consumer Inflation June 2012 :                   12.9%
FX Reserves: 17 July 2012 (USD bn)                    36.420
MPR                                                                             12.00%
Source: FMD and CBN