- Investors exchanged N19.36trn in spot foreign exchange market
Activities in the secondary market of the FMDQ Exchange in the first six months of 2023 showed that investors splashed N101.4 trillion on the various Fixed Income and Currency investment instruments offered in the market. Specifically, investment in the foreign exchange instrument stood at N19.36 trillion while corporate organizations in the financial services, manufacturing, agriculture, real estate sectors among others issued commercial papers to raise about N870 billion in six months to finance their operations. BAMIDELE FAMOOFO reports.
In six months, investments in the secondary market of the FMDQ Exchange platform stood at N101.37 trillion. The turnover of the market in six months is five times the size of the budget of fiscal sustainability and transition of Africa’s largest economy in 2023. The investment is also about three times bigger than the market capitalization of the Nigerian stock market as at Friday, August 12, 2023.Report from the Nigerian Exchange Limited on Friday showed that market capitalization sat at N35.55 trillion as at close of trading on the Exchange in the review period.
Transaction in the foreign exchange market (spot) stood at N19.36 trillion, reaching a peak of N4.77 trillion in June whilst the lowest transaction in that space was recorded in April (N2.18 trn).
The total value of CPs quoted on FMDQ Exchange in six months was N869.4 billion. Quoted CPs were issued by institutions from various sectors including Financial Services, Agriculture, Real Estate, Health and Pharmaceuticals, Retail, Manufacturing and Consumer Staples among others.
Month –on- Month performance review
Secondary market turnover on FMDQ Exchange in June 2023 was N21.74 trillion, representing a MoM and YoY increase of 37.78 percent (N5.96trn) and 19.41 percent (N3.53trn) from May 2023 and June 2022 figures, respectively.
Foreign Exchange, Money Market and CBN Bills transactions dominated secondary market activity, accounting for 80.49 percent of the total secondary market turnover in June 2023.
Total spot market turnover for all products traded in the secondary market was N17.82 trillion in June 2023, representing a MoM increase of 33.24 percent (N4.45trn) from May 2023 figures.
The MoM increase in total spot market turnover was jointly driven by an improvement in turnover across all products with FX, MM and FI transactions increasing MoM by 65.82 percent (N1.89trn), 33.70 percent (N1.39trn) and 18.21 percent (N1.16trn), respectively.
“Total spot market turnover for all products traded in the secondary market was N17.82 trillion in June 2023, representing a MoM increase of 33.24 percent (N4.45trn) from May 2023 figures”
The uptick in MM turnover was driven by an increase in Repos/Buy-backs, offsetting the MoM decline in Unsecured Placement/Takings transactions. Likewise, the improvement in FI turnover was driven by a MoM increase across all FI products, excluding OMO Bills and Other Bonds which decreased in the review period.
Primary market
The total value of corporate bonds listed on FMDQ Exchange in June 2023 was N17.50 billion representing a 43.55 percent (N13.50bn) MoM decrease from May 2023 listings. The corporate bond listings emanated solely from a single issuer in the Construction sector. As a result, the total outstanding value for corporate bonds increased MoM by 0.82 percent (N13.35bn) to N1.65 trillion in the review month.
The total value of CPs quoted on FMDQ Exchange in June 2023 was N52.13 billion, representing a MoM decrease of 68.17 percent (N111.64bn) from the value of CPs quoted in May 2023. Quoted CPs were issued by institutions from various sectors including Financial Services (12), Manufacturing(3), Agriculture(2), Real Estate(2), and Commodities Trading(2).
As a result, the total outstanding value of CPs increased MoM by 4.85 percent (N38.24bn) to N826.67 billion.
Sovereign securities
The DMO sold T.bills valued at N204.50 billion across its auctions in June 2023, representing a 36.97 percent (N119.93bn) MoM decrease on the value of T-bills sold across its auctions in May 2023 (N324.43bn).
Similarly, the DMO sold FGNBonds worth N473.16 billion in June 2023 via the reopening of one off-the-run and issuance of three on-the-run FGNBonds.
The total sale represented a 131.43 percent oversubscription of the amount offered, and a 13.22 percent (N72.10bn) MoM decrease on the amount sold in May 2023 (N545.26bn)across the two(2)10Y,one(1)20Y and one(1)30Y reopened FGN Bond maturities. The CBN did not auction OMO Bills in the primary market for the sixth consecutive month in June 2023.
May
Secondary market turnover on FMDQ Exchange in May 2023 was N15.78 trillion, representing a MoM and YoY increase of 25.67 percent (3.22trn) and 2.53 percent (N0.39trn) from April 2023 and May 2022 figures, respectively.
Foreign Exchange, Money Market and CBN Bills transactions dominated secondary market activity in May 2023, accounting for 80.25 percent of the total secondary market turnover.
Spot market
Total spot market turnover for all products traded in the secondary market was N13.37 trillion in May 2023, representing a MoM increase of 26.21 percent (N2.78trn) from April 2023 figures.
The MoM increase in total spot market turnover was jointly driven by an improvement in turnover across all products with FX, FI and MM transactions increasing MoM by 31.74 percent (N0.69trn), 25.97 percent (N1.31trn) and 22.98 percent (N0.77trn), respectively.
The increase in MM turnover was driven by auptickinRepos/Buy-backs and Unsecured Placement/Takings transactions. Likewise, the improvement in FI turnover was driven by a MoM increase across all FI products in the review period.
Primary Market
The DMO sold T.bills valued at N324.43 billion across its auctions in May 2023, representing a 15.41 percent (N43.33bn) MoM increase on the value of T-bills sold across its auctions in April 2023 (N281.10bn).
Similarly, the DMO re-opened two 10Y, one 20Y and one 30Y FGN Bonds worth N545.26 billion in May 2023.
The total sale represented a 151.46 percent oversubscription of the amount offered, and a 1.30 percent (N7.21bn) MoM decrease on the amount sold in April 2023 (N552.26bn) for the same FGN Bond maturities. The CBN did not auction OMO Bills in the primary market for the fifth consecutive month in May 2023.
April
Investments recorded a significant drop on the floor of the FMDQ Exchange with turnover recording a month on month drop of 48.45 percent or N11.8 trillion in April.
Year on year, investment declined by N6.79 trillion, representing 35.09 percent compared with the figure posted in April 2022. Turnover at the end of April 2023 stood at N12.55 trillion.
Breakdown of activities showed that foreign exchange, CBN Bills and Money Market transactions dominated secondary market activity in April 2023, accounting for 79.65 percent of the total secondary market turnover.
Total spot market turnover for all products traded in the secondary market was N10.60 trillion in April 2023, representing a MoM decrease of 49.04 percent (N10.19trn) from March 2023 figures.
The MoM decrease in total spot market turnover was jointly driven by a decline in turnover across all products with contributions by MM, FI and FX decreasing MoM by 43.84 percent (N2.62trn), 52.71 percent (N5.63trn) and 47.08 percent (N1.94trn), respectively.
The decrease in MM turnover was driven by a decrease in Repos/Buybacks and Unsecured Placement/Takings transactions. Likewise, the decline in FI turnover was driven by a MoM decrease across all FI products in the review period.
Market turnover was N2.18trillion ($4.72bn) in April 2023, representing a MoM decrease of 47.08 percent (N1.94trn) from the turnover recorded in March 2023 (N4.13trn).
In the FX Market, the Naira depreciated against the US Dollar, with the spot exchange rate ($N increasing by 0.34 percent ($/N1.59) to close at an average of $/N463.09 in April 2023 from $/N461.50 recorded in March 2023.
Further, exchange rate volatility increased marginally in April 2023 as the Naira traded within an exchange rate range of $/N462.00 – $/N464.00 compared to $/N461.00 – $/N462.00 recorded in March 2023.
Spot Fixed Income Market FI market turnover was N5.05 trillion in April 2023, representing a MoM decrease of 52.71 percent (N5.63trn) from the turnover recorded in March 2023 (N10.68trn).
The MoM decrease in the FI market turnover was jointly driven by a decline in turnover across all FI products with contributions by T.Bills, OMO1 Bills, CBN Special Bills, FGN Bonds and Other Bonds declining by 39.87 percent (N0.78trn), 52.99 percent (N1.75trn), 66.42 percent (N1.86trn), 47.24 percent (N1.23trn) and 39.62 percent (N0.004trn) respectively.
As a result, the Trading Intensity for T.Bills, OMO Bills and FGN Bonds decreased MoM by 0.16, 7.83 and 0.07 points to 0.25, 10.69 and 0.08 respectively.
At the primary segment of the market, the Debt Management Office, DMO, sold T.bills valued at N281.10 billion across its auctions in April 2023, representing a 55.51 percent (N350.74bn) MoM decrease on the value of T-bills sold across its auctions in March 2023 (N631.84bn). Similarly, the DMO sold FGN Bonds worth N552.47bn via re-openings of two (2) 10Y, one (1) 20Y and one (1) 30Y maturities in April 2023.
The total sale represented a 153.46% oversubscription of the amount offered, and a 1.93% (N10.90bn) MoM decrease on the amount sold in March 2023 (N563.36bn) for the same FGN Bond maturities. The CBN did not auction OMO Bills in the primary market for the fourth consecutive month in April 2023.
There were no corporate bonds listed on FMDQ Exchange in April 2023 compared to N112.42bn worth of corporate bonds listed in March 2023.
As a result, the total outstanding value for corporate bonds decreased MoM by 0.05% (N0.75bn) from N1, 610.24bn in March 2023 to N1, 609.49bn in the review month.
The total value of CPs quoted on FMDQ Exchange in April 2023 was N114.27bn, representing a MoM decrease of 67.74 percent (N239.91bn) from the value of CPs quoted in March 2023. Quoted CPs were issued by institutions from various sectors including Financial Services (5), Manufacturing (4), Real Estate (2), Retail (2) and Health and Pharmaceuticals (1). As a result, the total outstanding value of CPs increased MoM by 6.86 percent (N45.92bn) to N715.28bn.
March
Secondary market turnover on FMDQ Exchange in March 2023 was N24.35trillion, representing a month-on-month (MoM) and year-on-year (YoY) increase of 66.07 percent (N9.69trn) and 60.61 percent (N9.19trn) from the turnover recorded in February 2023 and March 2022, respectively.
Total turnover for Spot and Derivatives Market was N20.79trillion and N3.56trillion respectively in March 2023. Spot FX Market Turnover was $8.95bn (N4.13trn) in March 2023, representing a MoM increase of 52.21 percent ($3.07bn) from the turnover recorded in February 2023 ($5.88bn).
Further, the Naira appreciated marginally against the US Dollar in the FX market, with the exchange rate ($/N) decreasing by 0.94bps ($/N0.04) to close at an average of $/N461.50 in March 2023 from $/N461.54 recorded in February 2023, trading within a range of $/N461.00 – $/N462.00.
Similarly, in the Derivatives Market, total turnover in the FX Market segment was N3.56trillion ($7.71bn), representing a MoM increase of 71.18 percent (N1.48trn) from February 2023 figures.
“There were no corporate bonds listed on FMDQ Exchange in April 2023 compared to N112.42bn worth of corporate bonds listed in March 2023”
February
Secondary market turnover on FMDQ Exchange for the month ended February 28, 2023 was N14.66trillion, representing a month-on-month (MoM) and year-on-year (YoY) increase of 12.47 percent (N1.63trn) and 3.03 percent (N0.43trn) from the turnover recorded in January 2023 and February 2022, respectively.
Total turnover for Spot and Derivatives Market was N12.58trillion and N2.08trillion respectively in February 2023.
Spot FX Market Turnover was N2.71trillion ($5.88bn) in February 2023, representing a MoM increase of 0.63 percent (N0.02trn) from the turnover recorded in January 2023 (N2.69trn). Further, the Naira appreciated marginally against the US Dollar in the FX market, with the exchange rate ($/N) decreasing by 0.24bps ($/N0.01) to close at an average of $/N461.54 in February 2023 from $/N461.55 recorded in January 2023, trading within a range of $/N461.00 – $/N462.17.
Similarly, in the Derivatives Market, total turnover in the FX Market segment was N2.08trillion ($4.51bn), representing a MoM increase of 5.31 percent (N0.10trn) from January 2023 figures.
January
Secondary market turnover on FMDQ Exchange for the month ended January 31, 2023 was N13.04trillion, representing a month-on-month (MoM) decline of 38.04 percent (N8.00trn) and year-on-year (YoY) decrease of 7.75 percent (N1.10trn) from turnover in December 2022 and January 2022 respectively.
Total turnover for Spot and Derivatives Market was N11.06trillion and N1.98trillion respectively in January 2023.
Spot FX Market Turnover was N2.69trillion ($5.38bn) in January 2023, representing a MoM decrease of 41.72 percent (N1.93trn) from the turnover recorded in December 2022 (N4.62trn).
Further, the Naira depreciated against the US Dollar in the FX market, with the exchange rate ($/N) increasing by 2.29 percent ($/N10.34) to close at an average of $/N461.55 in January 2023 from $/N451.21 recorded in December 2022, trading within a range of $/N461.00 – $/N462.00.
Similarly, in the Derivatives Market, total turnover in the FX Market segment was N1.98trillion ($4.28bn), representing a MoM decrease of 43.10 percent (N1.50trn) from December 2022 figures.
