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ZOCK CAPITAL AND INVESTMENT: FIXED MARKET UPDATE AS AT 17TH AUGUST 2021

FOREIGN EXCHANGE MARKET

Naira appreciated at the I&E FX market,  it inched by 0.04 % as the dollar  closed at ₦411.50 as against the last close of ₦411.67. Most participants maintained bids between ₦400.00 and ₦415.00 per dollar.

FIXED INCOME SECURITIES  AND MONEY MARKET  UPDATE

SECONDARY MARKET

There treasury bills  secondary market was relatively bullish  with average yield across the curve decreasing by 32 bps to close at 4.58 % from 4.90 % on the previous day. The average yield across the short-term maturities remained unchanged at 3.33 % .Yields on the14-Jul-22 maturity bill was the most active bills with movement of 110basis points.

OMO BILLS
On the flip side, average yields in the OMO market  dipped  by 10 bps to close at 7.53 % .We saw the bulls on the run  at the short end of the curve with the average yields dropping  by 22 bps.. investors preference was  seen in the 7-Sep-21 maturity bill while mid term and longterm maturities remained unchanged at 7.59 % and 8.50 %.

INVESTMENT IN TREASURY BILLS
PRIMARY MARKET AUCTION (PMA)

MONEY MARKET

The Overnight rate increased by 0.17 % to close at 17.67% as against the last close of 17.50 %, while the Open Buy Back rate remained unchanged at 17.00 %.

FGN BONDS SECONDARY MARKET
FGN bonds secondary market was active especially on the  FGNSB 16-AUG-2022 bond  with a decline in yield of 101 bps. However, the average bond yield across the closed at 8.61% from 8.82% on the previous day.
INVESTMENT IN FGN PMA BOND MARKET YIELD CURVE
DMO is scheduled to offer FGN bond worth ₦150 billion through re-opening of 10-year (₦50 billion), 20-year (₦50 billion), and 30-year (₦50 billion) tenors ,  scheduled for August 18th 2021 and settlement Aug 20th, 2021. We expect players to take align their respective portfolios ahead of the auction.

MARKET NEWS HEADLINES

Court Freezes Bank Accounts Of Forex Trading Platforms

 Nigeria’sThe Federal High Court Abuja has frozen the bank accounts of some investment and trading platforms that Nigerians have been using to transact online.Justice Ahmed Mohammed made the order on Tuesday while delivering his ruling in an ex parte application filed by the Central Bank of Nigeria through its lawyer, Micheal Aondoakaa (SAN).Justice Mohammed stated that persons who were aggrieved by the order could approach the court for redress.

The CBN told the court that the financial activities of the defendants were being probed for operating without obtaining licence as asset management companies and utilizing FX sourced from the Nigerian FX market for purchasing foreign bonds/shares in contravention of the CBN circular referenced TED/FEM/FPC/GEN/01/012, dated July 01, 2015.

FX Squeeze – Manufacturers Begin To Look Inward For Survival – THISDAY

The illiquidity in the Nigeria’s foreign exchange market is forcing operators in the Nigerian manufacturing sector to look inward for local raw materials to reduce costs and remain afloat.

The Nigerian industrial sector is in dire financial straits. The sector is faced with challenging foreign exchange squeeze. This has constrained growing number of them to adjust their operations by looking inward for local supply of raw materials as the dearth of hard currencies needed to fund their inputs from abroad bite harder.

Last week, the Director of Finance, Unilever Nigeria Plc, Adesola Sotande-Peters, said during an investors conference call that the Unilever is constrained to source for dollars above the official market rate due to paucity of forex.Sotande-Peters disclosed that the company bought dollars at between N440 and N450 during the first and second quarters of 2021 to import petrochemicals, which is a major raw material for its products.

NIGERIA’S INFLATION EASES FOR 4TH STRAIGHT MONTH IN JULY ON FOOD PRICES – REUTERS

Nigeria’s annual inflation dipped for the fourth straight month in July to 17.38% thanks to a slow-down in food price increases, the statistics office figures showed on Tuesday, ahead of second quarter output data next week.

Inflation, which has been in double-digits since 2016, stood at 17.75% in June. Food price inflation, the major component of the headline figure, eased 80 basis points from the previous month to 21.03% in July, the National Bureau of Statistics (NBS) said. However, core inflation, excluding prices of farm produce, rose 63 basis point to 13.72%.

“The highest increases were recorded in prices of garments, shoes and … vehicle spare parts, major household appliances, pharmaceutical products and hospital services,” the NBS said in a report.The government has said inflation is a structural problem linked to structural deficits and not solely a money supply issue, pointing out that most of it was also imported. The central bank has kept its benchmark interest rate on hold at 11.5% for almost a year and continues to pursue a managed float of the naira currency, as it tries to boost growth while combating rising inflation.

DISCLAIMER: This publication is strictly for information purposes only for Zock capital and invest  LLC  and its employees take no responsibility or liability as to the accuracy and completeness of the information.
For further ./enquiries/information on this publication, please contact Research and Economic Intelligence .

Analyst: Judith Idialu: Zock capital and Investment LLC,
0805 598 0595

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