Policy Dynamics & Market Sentiments
Prologue
In the week under review, exciting developments were observed in the country’s financial sector following the ban of Binance, specifically, the recent Treasury Bills auction, which showcased significant investor interest and strategic policy measures. Concurrently, Egypt’s Central Bank implemented significant adjustments to its benchmark interest rates, reflecting broader regional trends similar to those implemented by Nigeria’s CBN in recent times.
Comparing the oil prices from last week with the preceding week, both WTI Crude Oil and Brent Oil experienced declines last week compared to the preceding week. However, the magnitude of the decline differed slightly. WTI crude oil showed a larger decrease in percentage terms compared to Brent oil, indicating that WTI crude oil was relatively more affected by market factors last week than Brent oil. Overall, both oil benchmarks faced downward pressure last week.
Policy Dynamics & Market Sentiments
The result of the Nigerian Treasury Bill (NTB) auction held on Wednesday, March 6th, 2024, indicates robust investor interest, with a total subscription of ₦66.6billion against an offer of ₦14.4billion for the 91-day tenor. Despite the high subscription, the allotment matched the offer amount. The range of bids varied from 15.9000% to 22.0000%, with a stop rate of 17.2400%. For the 182-day and 364-day tenors, the subscription amounts were ₦51.5billion and ₦1,543.8billion, respectively, against offers of ₦10,5billion and ₦312.9billion. The stop rates for these tenors were 18.0000% and 21.4900% respectively.
In contrast, the previous NTB auction held on February 21st, 2024, showed significant oversubscription across all tenors, with subscription amounts exceeding the offer amounts by a large margin. There are notable differences in subscription amounts across all tenors. For the 91-day tenor, the recent auction saw a subscription of ₦66.6 billion compared to ₦368 billion in the previous auction; similarly, for the 182-day tenor, the recent subscription amounted to ₦51.5 billion compared to ₦98.7 billion in the previous auction. The subscription for the 364-day tenor in the last auction was ₦1,771.2billion but reduced to ₦1,543.8billion at the auction on Wednesday. Levels of subscription could also be said to have been affected by the 400 basis points (bps) hike in the MPR rate on February 27th, 2024, and the continued short market liquidity position.
With the substantial hike of interest rates by 400bps to 22.75% and issuing 1-year securities at a 27% effective yield, actions are seen as robust responses to perceived economic imbalances, potentially driven by factors such as high inflation or currency depreciation in economies with weak fundamentals. It is worth noting that Egypt’s Central Bank also raised its benchmark interest rate by 600bps to 27.25%.
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
Outlook
AfDB has launched a $134 million fund for food production in Nigeria.
767 manufacturing companies shut down in Nigeria, ₦350billion goods unsold in 2023.
FG threatens to revoke DisCos’ license due to their poor power supply.
The SEC will introduce a new anti-money laundering policy for digital asset operators.
Lagos signs MoU with Niger state on food production and supply.
Outlook
Turkey’s inflation has risen to 67%.
Price caps on fuel and electricity tariff could cost Nigeria 3% of GDP in 2024 – IMF.
Sweden joins NATO as the war in Ukraine prompts security rethink.
SEC plans investor clinics in 2024 to reduce N190billion unclaimed dividends.
UNICEF donates $290.4 million worth of medical supplies to boost healthcare in Yobe state.
African startups raised $217million in February 2024.
