Regulatory Signals Drive Markets Into New Year
Prologue
The end of the year 2023 was characterized by a significant drop in Nigerian fixed income yields largely due to the belief that the CBN was not keen on conducting Open Market Operations (OMOs) in the future and partly driven by excess liquidity in the banking system. Although many stakeholders opined that consistent OMOs would ultimately bring about the necessary traction with FPIs, others suggested that the cost of OMO issuances are pointless, and the latter seemed for some time to be consistent with the CBN position. Some analysts argue that the drop in yields, although typical of Q4 in the Nigerian parlance, may likely increase pressure on the local currency (NAFEM last reported at $/N907.11 on the 29th of December 2023). On a brighter note, it is expected that the issuance of guidelines on the operation of accounts for Virtual Asset Service Providers (VASPs) could salvage the Naira.
Regulatory Signals Drive Markets Into New Year
The OMO auction conducted on the 20th of December 2023 produced astonishing outcomes for the fixed income markets, as the immediate reaction was an instant freeze with bearish sentiment. The entire market had adduced that OMOs were a thing of the past. The 15% stop rate was particularly shocking for the market participants as it was deemed significantly lower than rates considered viable in OMO territory. The OMO auction was followed by further declines across the yield curve. There was another OMO offered at the end of the week which closed with no sale, and again, the no sale result dragged yields in the yield curve even lower. Stop rates for benchmark 30-year bonds have trended in the last quarter from 16.60% in October to 18.00% in November 2023 to close at 17.15% in December 2023. The last NTB auction for the year printed stop rates at 7.00%, 10.00% and 12.24% for 91, 182 and 364 days respectively.
Market Highlight: Vol. 92
- Nigeria’s FX reserves dip by over $2 billion in less than one month, hitting the lowest level in over six years.
- BDCs now buying dollars at ₦980/$, naira appreciating faster than expected – ABCON President.
- Customs’ revenue at Tincan Port increases by 139% in Q1 2024.
- UBA seeks shareholders’ approval to issue 10.8 billion shares.
- Nigeria records ₦234 trillion e-payment transactions in Q1 2024.
- NGX urges FG to drive listings to deepen the capital market and boost tax revenue.
- Transcorp Power reports N28.772 billion pre-tax profit in Q1 2024.
- Egypt, Ghana, Nigeria, and others emerge as African countries with the highest T-bill yields in Africa.
- Pension Fund Administrators (PFAs) channelled 72% of investments in fixed-income assets in 2023
Local News
Nigeria has received $2.25bn from Afrexim Bank, part of the $3.3bn facility.
Non-oil revenue soars by 67% to N4tn – CBN.
Lagos Chamber of Commerce and Industry (LCCI) predicts lower inflation rate in 2024.
Nigeria’s debt hits ₦87.91 trillion — DMO.
CBN lifts ban on crypto transactions.
Global News
Angola set to leave OPEC effective January 2024.
Saudi Arabia launches unified online platform to streamline visa applications for tourists.
Mongolia opens door to foreign banks for the first time, in a bid to grow their financial sector.
Top-performing Korea hedge fund with 30% gain is bullish on banks for 2024.
