The Central Bank of Nigeria (CBN) reported a significant rise in remittance inflows, reaching $553 million in July 2024 – an increase of 130% from the same period in 2023, marking the highest monthly inflow on record. This surge is attributed to the CBN’s efforts to enhance liquidity in Nigeria’s foreign exchange market through policies such as licensing new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller forex model, and ensuring timely naira liquidity access for IMTOs.
The increase in remittances aligns with the CBN’s goal to double formal remittance receipts within a year and reflects the effectiveness of its strategies in boosting public confidence in the forex market and supporting economic stability. Despite this progress, Nigeria’s external reserves declined slightly, and the naira weakened against the dollar. Analysts suggest that Nigeria could potentially attract $100 billion in yearly remittances by investing in education, skills development, and exports, similar to India’s achievements.
Money Market
Market liquidity opened the day at ₦1.22 trillion long. The Open Buy Back (OBB) rate and the Overnight (OVN) rate closed at 25.78% and 26.17%, respectively.
We expect rates to hover around current levels.
Treasury Bills Market
The FGN Treasury Bills Market witnessed a calm session at the start of the week with a bullish bias. There was demand for the 7 Aug bill bid at 20.59% while offers remained scarce. At the PMA this week, the DMO offered N409.98 billion across the standard tenors. While total subscription stood at N1.03 trillion, only N291.03 billion was allotted. We saw stop rates on the 91-day and 182-day bill dip by 30 bps to 18.20% and 19.20% while the 364-day bill slid by 99 bps to 20.90%. Sequel to the auction, the newly issued one year bill was quoted 19.40/19.20 at Friday closing. In addition, the 17 June OMO bill was bid at 21.90% and offered 21.40%.
We expect similar sentiments.
FGN Bond Market
The FGN Bond Market traded on a quiet note at the beginning of the week as focus was on the outcome of the bond auction. Nevertheless, we saw trades consummated on the May 33s at 21.20%. At the auction, the DMO offered N190bn across the 29s, 31s and 33s. However, N374.75bn was sold against a total subscription of N460.18bn. These stop rates on the 29s inched up by 41bps to 20.30% while the 31s & 33s declined by 10 bps and 48 bps to 20.90% and 21.50% respectively. There were mild bearish sentiments shortly after the auction, but this was short lived as bullish sentiments ensued. We saw trades consummated on the 33s as low as 20.90% and the 34s at 19.70%. Finally, the 29s and 53s exchanged hands at 20.10% and 18.20% respectively. Week-on-week, the average benchmark yield declined by 1bps to close at 19.31%
We expect the trend to continue.
FGN Eurobond Market
The FGN Eurobond Market traded on a calm note with a bullish tilt as investors continued to look ahead to Fed chair Powell speech. The market remained in mild bullish territory as investors looked ahead to the FOMC minutes. Consequently, the minutes revealed that the vast majority saw September cut as likely. Data from the United States this week showed that the initial jobless claims printed at 232K vs. 230K expected and 228K prior. Furthermore, the S&P global manufacturing PMI printed lower at 48.0 vs. 49.6 prior while the S&P Global Services PMI printed at 55.2 vs. 54 expected and 55 prior. At Fed Chair Powell Speech, he stated that confidence has grown that inflation is on the path to 2% and the time has come for a policy adjustment.
We expect the bullish trend to persist.
Currency Market
The value of the Naira to the dollar appreciated by 62bps printing at ₦1570.14/$ to close the week at the Nigerian Autonomous Foreign Exchange Market Window (NAFEM).
Equities Market
The local stock market ended the day with the benchmark NGX All-Share Index (ASI) appreciating by 27bps to close at 95,973.45, bringing the year-to-date return to 28.35%. Market capitalization also rose, closing at ₦55.14 trillion. Market breadth was positive at 2.91x, with 32 stocks advancing and 11 declining. This performance was driven by gains in OANDO [MRF] (+10.00%), MCNICHOLS (+10.00%), and TOTAL (+9.98%), and losses in TIP (-9.78%), FTNCOCOA [RST] (-5.00%), and CUTIX (-4.91%).
Trading activity was subdued, with the volume of shares traded declining by 17% to 327.28 million units, and the value of shares traded decreasing by 21% to ₦4.61 billion. The most actively traded stocks by volume were ACCESSCORP with 36.85 million units, VERITASKAP 27.68 million units, and FCMB with 24.68 million units. In terms of value, ACCESSCORP led with ₦716.32 million, followed by OANDO [MRF] at ₦612.97 million, and GTCO at ₦513.21 million.
Despite the day’s positive performance, the NGX All-Share Index reflected a 1-week loss of 1.16% and a 4-week loss of 2.27%, although it maintained an overall year-to-date gain of 28.35%. Other notable indices are the NGX Top 30 Index (+0.27%; -1.29% 1WK; +27.3% YTD), NGX Banking Index (+0.88%; +0.37% 1WK; -6.29% YTD), and NGX Oil & Gas Index (+3.55%; +3.54% 1WK; +64.44% YTD).
