Nigeria’s external reserves have reached $40.2 billion, attributed to the Central Bank of Nigeria’s (CBN) shift away from defending the naira, thus allowing the market to influence exchange rates. This organic reserve growth aligns with CBN and government goals to reduce reliance on interventions and foster transparency in the FX market. Capital importation nearly doubled to $6.9 billion by August 2024, and Diaspora remittances surged, reflecting enhanced FX inflow. Government reforms, including the removal of fuel subsidies and encouraging local production, have improved investor confidence, with notable boosts in foreign portfolio investments. Finance Minister Wale Edun affirmed the government’s ongoing focus on transparency in reserve reporting, stating that Nigeria’s economic adjustments, including market-based petroleum pricing, are expected to support sustained investor confidence and economic stability.
Money Market
Market liquidity opened the day at ₦183.98 billion long. The Open Buy Back (OBB) rate and the Overnight (OVN) rate closed at 29.78% and 30.14%, respectively.
We expect rates to hover around current levels.
Treasury Bills Market
The FGN Treasury Bills Market opened the week quietly, with minimal activity as investors focused on the FGN bond auction. As the week progressed, improved offers were seen on the 6 Feb bill at the 23.00% handle. At the auction this week, the DMO offered and sold N375.67bn on offer against N489.83bn subscription. Stop rates on the 91-day and 182-day remained unchanged at 17.00% and 17.50% respectively, while the stop rate on the 364-day bill rose by 78bps to 20.65%. Sequel to the auction, activity was centered around the newly issued 364-day bill which traded at 20.30%. Week on week, the average benchmark yield appreciated by 9bps to close at 24.20%
We expect a calm session.
FGN Bond Market
The FGN Bond Market started the week quietly, with participants trading cautiously ahead of the bond auction. At the auction, the DMO offered ₦180bn across the APR 2029 and FEB 2031 bonds, receiving ₦388bn in total subscriptions. The DMO sold ₦289.6bn, with 81% of the allocation going to the 2031 bonds. The stop rates closed at 20.75% and 21.74%, respectively. The FGN Bonds Market saw buying interest, particularly on the 2031 maturity which traded as low as 21.20%. In addition, we saw trades consummated on the 33s and Feb 34s at 20.50% while the 19.30% 2029 bond was bid at 20.55% and offered 20.35%. Week-on-week, the average benchmark yield declined by 2bps to close at 18.77%
We expect a similar session.
FGN Eurobond Market
The FGN Eurobond Market opened the week on a negative trend largely due to worries that Presidential Candidate Trump’s tariffs could reignite inflation and widen the U.S fiscal deficit with proposed tax cuts. This was also exacerbated as Fed officials dial back the pace of rate cuts. Data from the United States showed that the S&P Global Manufacturing PMI printed at 47.8 vs 47.5 predicted and 47.3 previous while the Services PMI printed at 55.3 vs 55.0 predicted and 55.2 previous. In addition, Unemployment claims rose by 227K vs 243k predicted and 242k previous. However, there was a reversal of this trend as news of Angola/IMF talks spurred buying sentiments across. Week-on-week, the average benchmark yield appreciated by 13bps to close at 9.39%
We expect the bullish trend to persist, albeit modestly.
Currency Market
The value of the Naira to the dollar appreciated by 5bps compared to the previous week, printing at ₦1600.00/$ to close the week at the Nigerian Autonomous Foreign Exchange Market Window (NAFEM).
Equities Market
The local bourse ended the day with the benchmark NGX All-Share Index (ASI) appreciating by 26bps to close at 99,448.91. Market capitalization also increased, closing at ₦60.26 trillion. Market breadth was positive at 2.79x, with 39 stocks advancing and 14 declining. This performance was driven by gains in CAP (+10.00%), LIVESTOCK (+9.79%) and EUNISELL (+8.90%), and losses in DAARCOMM (-9.86%), MCNICHOLS (-5.10%), and FTNCOCOA (-4.76%).
Trading activity was mixed on the day, with the volume of shares traded increasing by 14.84% to 459.79 million units, while the total value of shares traded decreased by 39.41% to ₦9.52 billion. The most actively traded stocks by volume were CHAMS with 97.66 million units, UBA with 88.48 million units, and STERLING with 32.30 million units. In terms of value, UBA led with ₦2.61 billion, followed by ARADEL at ₦2.06 billion, and ZENITH ₦18.83 billion.
Reflecting the day’s performance, the NGX All-Share Index reflected a 1-week gain of 1.33% and a 4-week gain of 0.89%, with an overall year-to-date gain of 33.00%. Other notable indices are the NGX Top 30 Index (-0.06%; +1.45% 1WK; +32.95% YTD), NGX Banking Index (+0.76%; +7.87% 1WK; 11.60% YTD), and NGX Oil & Gas Index (0.13%; +3.97% 1WK; +118.54% YTD).
