2016 economy: Markets start on mixed fundamentals

Market indicators of the financial health and perception of the economy appeared hazy as indicators point to all directions, with stock market looking up, currency market looking down and money market in mixed-grill. Though the Nigerian Stock Exchange All Shares Index, NSE ASI, closed the year down by 17.36 per cent the market will be opening for the first trading day of 2016 from a positive point following the steady positive streak it recorded in the last trading week of 2015.

The index appreciated by 3.11 per cent and 3.79 per cent last week Thursday and Wednesday respectively after a similar positive closing earlier in the week. NSE ASI closed the year at 28,642.25 points, compared with 34,657.15 as at end-December 2014.    But week-on-week, the Index appreciated by 6.59 per cent and month-on-month it appreciated by 4.59 per cent in the last month of 2015.

In the currency market the Naira is likely to sustain stability this week on both the parallel and official interbank markets on weak demand for US Dollar with unofficial supplies and businesses yet to pick up for demands.

The local currency traded at N267/ USD1.0 on the parallel market on Thursday last week up from this year’s low of N280/ USD1.0 witnessed middle of last month. But the currency traded at N199.5/ USD1.0 in Central Bank of Nigeria, CBN’s managed official market, some 1.26 percent weaker.

Also parallel market dealers say the reprieve and stability witnessed in the unofficial market was largely temporal as they see the rate resuming downwards slide in the next one to two weeks. In the money market Nigrian Interbank Offered Rates moved in mixed directions and dealers believe the trend will remain mixed in the days ahead.

At close of market last week the three month and six months tenors advanced, respectively, to 10.67 per cent and 12.76 per cent but, the one month tenor decline to 8.59 per cent while the overnight rate held steady. Also, the Nigerian Interbank True Treasury Bills Yields mostly advanced on apparent demand   as yields on the one month, three month and six month yields rose to 1.49 per cent, 7.02 per cent and 7.72 per cent respectively. However, the three month yield fell to 3.53 per cent.

Also in the Federal Government Bond, FGN Bond market, OTC NG FGN bonds at the over the counter market moved in mixed directions as bulls struggled against bears. The 10-year, 16.39 per cent FGN January 2022 debt appreciated by N0.12 while its corresponding yield decreased to 10.84 per cent.

However, the 20-year, 10 per cent FGN July 2030 bond, the 5-year, 15.70 per cent FGN April 2017 paper and the 3-year, 13.05 per cent FGN August 2016 paper declined respectively, by N0.10, N1.01 and N0.03 while their corresponding yields rose to 10.95 per cent, 7.85 per cent and 5.96 per cent respectively. Meanwhile the 7-year 16.00 per cent FGN June 2019 bond remained steady.

http://www.vanguardngr.com/2016/01/2016-economy-markets-start-on-mixed-fundamentals/