Peaks and Valleys in Nigeria’s Finance
Prologue
Amidst Nigeria’s financial outlook, the week unfolded with anticipation and uncertainty. Budget revelations,In the heart of Nigeria’s financial markets, the past week was a whirlwind of events, marked by two pivotal auctions – the Nigerian Treasury Bills (NTBs) and the Open Market Operations (OMO), amongst many others. These concurrent actions sparked diverse outcomes, triggering lively discussions within financial circles. From unexpected subscription patterns to market speculations, the week left traders and experts intrigued. fluctuating yields, market surges, and the unveiling of a new stable coin all marked the rhythms of the economy. As the naira wrestled with volatility and the country’s economic pulse quickened, a tale of financial ebbs and flows emerged, shaping the path for investors, markets, and the nation’s economic prospects.
Peaks and Valleys in Nigeria’s Finance
In the oil trading session of the week, the WTI Crude Oil commenced at 73.51, achieving a zenith of 73.95, a nadir of 70.13, and concluded at 70.77. This exhibited a -4.12% alteration from its preceding trading position. On the preceding Friday, it opened at 73.01, reached a pinnacle of 75.25, touched a trough of 72.36, and eventually closed at 72.68, signifying a +0.92% fluctuation from the day before. Fluctuation witnessed in the oil market is said to be as a result of various activities in the market over the week spanning from Saudi Arabia, a leading OPEC+ member recently selling oil at lower price to Asia, US inflation data release, US and UK attack on Houthi targets in Yemen and others.
During the OMO auction on Wednesday, featuring the 97-day, 181-day, and 363-day tenors, the allotments were 75 billion, 75 billion, and 150 billion of which the shorter tenors were undersubscribed, and longer tenor oversubscribed by twice as much. The stop rates closed at 10.5000%, 14.0000%, and 17.7500% resulting in 200bps and 275bps rise for the 181-day and 363-day tenors respectively from previous auction.
Concurrently, at the NTB auction, we witnessed borrowing appetite (allotment) being matched with actual offering as stop rate closed at 2.4400, 4.2200 and 8.3990 for the 91-day, 182-day, and 364-day tenors depicting a drop of 456bps, 578bps and 384bps from the previous close. Notably, concerns arose among market experts regarding the closure of a 3-month OMO auction surpassing that of a 1-year NTB, prompting speculations among traders.
Turning to FGN Bonds, the 53s have displayed bullish trends since December 2023. Throughout the week, there has been a consistent decline in yield, particularly as the market saw 53s breach the 16% threshold and poised to breach 15% imminently. The prevailing bullish direction in financial markets since December 2023 can be attributed to excess liquidity to some extent.
In other news, the Nigerian Stock Exchange (NGX) concluded a trading day in the bearish zone for the first time in the new year. The All-Share Index plummeted by 1.4%, closing at 82,024.38 points. Following an impressive surge that witnessed an 11% appreciation in six trading days, investors commenced profit-taking, resulting in losses for 62 stocks against 13 gains. The equities market saw a substantial decline of about N639 billion in a single day, with market capitalisation dropping to N44.885 trillion from the previous day’s N45.524 trillion.
Shifting focus to the foreign exchange market, the Naira made a remarkable recovery against the dollar on Thursday, January 11, 2024, at the official market. After reaching a record low on Wednesday, January 10, 2024, the naira appreciated by 19.17%, closing at N874.79 to a dollar. This represented a gain of N207.53 or a 19.17% increase compared to the previous day’s closing at N1,082.32. The intraday high and low were N1264.96/$1 and N475/$1, respectively, showcasing a significant spread of N789.96/$1. Notably, forex turnover at the close of trading was $110.41 million, reflecting a 54.49% decrease from the previous day.
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
FG to raise N35 billion through local financing to kickstart Ajaokuta Steel Plant.
EFCC says Matawalle’s N70 billion fraud case will be reviewed.
More multinationals may exit Nigeria in 2024 – Cardinal Stone.
NBC invests $1.32 billion in Nigerian operations.
Global Developments
US inflation accelerates, tempering case for Fed to cut rates.
BlackRock strikes $12.5 bn deal for Global Infrastructure Partners.
UK economy at risk of recession despite November growth.
US, UK Launch Strike Against Houthi Rebels – Bloomberg.
Spot Bitcoin ETFs take Wall Street by storm with historic debut.
