- Turnover records N2.54 trn YoY increase
Business transactions in the Fixed Income and Currencies market rose by 1.43 percent (N2.54 trillion) year-on-year on the platform of the FMDQ Exchange as at end of October 2022, with turnover closing at N180.45 trillion compared with N177.91 trillion recorded in 10 months in the financial year 2021.On month- on -month basis, turnover reached its peak in September, printing N19.86 trillion. The market recorded its worst performance of the year in October with turnover dropping 31.84 percent or N6.33 trillion month-on-month. BAMIDELE FAMOOFO reports.
Activities kicked off on a cautious note in the FIC market in January 2022 with total market turnover recording N14.13 trillion across all product lines (Foreign Exchange (FX), Money Market (MM) and CBN Bills). Investors’ confidence grew as the days progressed with transactions in February increasing marginally by 0.71 percent (N0.1 trn) N14.23trillion.
The figure recorded in the second month of the year 2022 however represents a year-on-year decrease of 24.67 percent compared with the figure in February 2021.
A close look at the trend of activities in the FIC market showed that Foreign Exchange (FX), Money Market (MM) and CBN Bills transactions dominated secondary market activity in the review period, accounting for more than 80 percent of total secondary market turnover on the average. Investors showed significant interest in the Treasury Bills and Corporate Bonds markets in the review.
On the flipside, investment in the stock market also witnessed a downturn in October the All-Share Index (ASI) and Market Capitalization (MC) decreased to 43,839.08 and N23.88 trillion on October 31, 2022, from 49,836.51 and N26.88 trillion respectively, on August 31, 2022.
The Monetary Policy Committee of the Central Bank of Nigeria, during its last meeting for the year noted with concern the continuing bearish performance of the equities market in the review period.
The decrease in the stock market, according to MPC, reflected the sustained sell-off and profit taking by investors rebalancing their portfolios to benefit from higher yields in the fixed income market.
Other contributory factors identified by the MPC that led to the poor performances of the markets at the end of third quarter include inflationary and exchange rate pressures, and tightening external financial conditions.
“Other contributory factors identified by the MPC that led to the poor performances of the markets at the end of third quarter include inflationary and exchange rate pressures, and tightening external financial conditions”
Monthly performance scorecard
Secondary market turnover in October 2022 stood at N13.54 trillion, representing a MoM decrease of 31.84 percent (6.33trn) and a YoY decrease of 21.33 percent (N3.67trn) from September 2022 and October 2021 figures respectively.
Foreign Exchange (FX), Money Market (MM) and CBN Bills transactions dominated secondary market activity in October 2022, accounting for 87.52 percent of the total secondary market turnover.
The monthly financial markets performance data released by the FMDQ Exchange showed that the Debt Management Office in October sold T.bills valued at N144 billion across its auctions in October 2022, representing a 73.99 percent (N409.66bn) MoM decrease on the value of T-bills sold across its auctions in September 2022 (N553.66bn).
In the review month, the CBN did not auction OMO Bills in the primary market compared to N25.60 billion worth of bills sold in September 2022.
At the sovereign securities segment of the market, the total value of corporate bonds listed on FMDQ Exchange in October 2022 was N50.09 billion compared to the previous month when no corporate bonds were listed on the Exchange. Corporate bond listings emanated solely from two (2) issuers in the Financial Services and the Power & Utility sectors. As a result, the total outstanding value for corporate bonds increased MoM by 3.64 percent (N42.55bn) to about N1.21 trillion.
The total value of Commercial Papers quoted on FMDQ Exchange in October 2022 was N66.51billion, representing a MoM increase of 196.92 percent (N44.11bn) from the value of CPs quoted in September 2022.
Quoted CPs were issued by institutions from various sectors including Financial Services (8), Real Estate(2), Agriculture(1), Oil & Gas(1), Logistics(1)and Telecommunications(1). In October 2022, CPs with a total value of N139.69 billion matured and were redeemed resulting in a MoM decrease of CPs outstanding by 15.00 percent (N73.18bn) to N414.55 billion.
Turnover in September increased by 27.87 percent on a monthly basis to about N19.86 trillion but the figure recorded a decrease of 17.35 percent or N4.17 trillion YoY from August 2022.
Foreign Exchange (FX), Money Market (MM) and CBN Bills transactions dominated secondary market activity in September 2022, accounting for 84.99 percent of the total secondary market turnover.
The DMO sold T.bills valued at N553.66 billion across its auctions in September 2022, representing a 24.10 percent (N107.51bn) MoM increase on the value of T-bills sold across its auctions in August 2022 (N446.15bn).
In September 2022, the CBN sold OMO Bills worth N25.60 billion exceeding the amount offered by 28.00 percent (N5.60bn), representing the first issuance since June 2022. There were no corporate bonds listed on FMDQ Exchange in September 2022 compared to N27.28 billion worth of corporate bonds listed in August 2022.
As a result, the total outstanding value for corporate bonds decreased MoM by 0.91 percent (N10.78bn) to about N1.17 trillion. Total value of CPs quoted in the market September 2022 was N22.40 billion, representing a MoM decrease of 22.91 percent (N6.66bn) from the value of CPs quoted in August 2022.
Quoted CPs were issued by institutions from various sectors including Financial Services (2), Agriculture (4), Real Estate (1) and Manufacturing (2).
In September 2022, CPs with a total value of N29.56 billion matured and were redeemed resulting in a MoM decrease of CPs outstanding by 1.45 percent (N7.16bn) to N487.73 billion.
Turnover recorded a MoM decrease of 21.4 percent on FMDQ Exchange in August 2022, standing at N15.53 trillion, but YoY, turnover increased by 26.0 percent (N3.20trn), respectively. As usual, Money Market (MM), CBN Bills and FX Markets transactions dominated secondary market activity in August 2022, accounting for 88.38 percent of the total secondary market turnover.
In the Sovereign Securities market, the DMO sold T.bills valued at N446.15 billion across its fully subscribed auctions in August 2022, representing a 9.47 percent (N38.60bn) MoM increase on the value of T-bills sold across its auctions in July 2022 (N407.55bn).
Similarly, the DMO sold FGN Bonds worth N200.58 billion (less than the total amount of FGN Bonds offered by N24.42bn) via two (2) 10Y and one (1) 20Y re-openings in August 2022.
However, this represents a 61.97 percent (N76.74bn) MoM increase relative to July 2022 (N123.84bn) for the same FGN Bond issues. However, for the second consecutive month, the CBN did not auction OMO Bills in August 2022.
Meanwhile, the total value of corporate bonds listed on FMDQ Exchange in August 2022 was N27.28 billion representing a 76.48 percent (N88.72bn) MoM decrease from the value of corporate bonds listed in July 2022.
Corporate bond listings emanated solely from two (2) issuers in the Infrastructure and Information & Communication Technology sectors in August.
As a result, the total outstanding value for corporate bonds increased MoM by 2.35 percent (N27.09bn) to about N1.18 trillion. Similarly, the total value of CPs quoted on FMDQ Exchange in August 2022 was N29.05 billion, representing a MoM increase of 37.28 percent (N7.89bn) from the value of CPs quoted in July 2022.
In August, quoted CPs were issued by institutions from various sectors including Financial Services (3), Agriculture (2), Real Estate (4), Health & Pharma (1), Commodities Trading (1) and Logistics (1). In August 2022, CPs with a total value of N58.74 billion matured and were redeemed resulting in a MoM decrease of CPs outstanding by 5.66 percent (N29.69bn) to N494.89 billion.
Total spot market turnover for all products traded in the secondary market was N13.46 trillion in August 2022, representing a MoM decrease of 23.22 percent (N4.07trn) from July 2022 figures. The MoM decrease in spot market activity was driven by the 47.67 percent (N3.91trn) and 20.81 percent (N0.66trn) decrease in MM and FX transactions, respectively, despite the 8.11 percent (N0.50trn) increase in fixed income (FI) transactions in August 2022. The decrease in MM turnover was driven by a decrease in Repo/Buy-Back transactions, while the increase in Fixed Income turnover was jointly driven by MoM increases in T.bills and OMO Bills turnover, offsetting the decline in the turnover figures for other FI products.
Turnover in July 2022 was N19.76trillion, representing a MoM increase of 8.54 percent (1.55trn) and a YoY increase of 16.45 percent (N2.79trn), respectively.
Money Market (MM) transactions dominated secondary market activity in July 2022, accounting for 41.56 percent of the total secondary market turnover The DMO sold T.bills valued at N407.55 billion across its fully subscribed auctions in July 2022, representing a 25.20 percent (N137.32bn) MoM decrease in T-bills sold across its auctions in June 2022 (N544.87bn).
Similarly, the DMO re-opened two (2) 10Y and one (1) 20Y FGN Bonds issues in July 2022, selling FGN Bonds worth N123.84 billion (sub-ceiling the total amount of FGN Bonds offered1 by N101.16bn), representing a 45.23 percent (N102.28bn) MoM decrease relative to June 2022 (N226.12bn) for the same FGN Bond issues. However, the CBN did not auction OMO Bills in the primary market in July 2022, compared to N40.00bn worth of OMO Bills sold in June 2022.
Half year performance
Total market turnover in the half year period of 2022 stood at N96.45 trillion representing an increase of 5.87 percent year-on-year compared with N91.1 trillion recorded in the same of 2021. By implication, investors committed additional N5.35 trillion into the FIC market in 2022 as against the figures recorded in 2021.
Breakdown of performance showed that June recorded turnover of N18.20 trillion, representing a month-on-month (MoM) increase of 18.31 percent (N2.82trn) and year-on-year (YoY) increase of 18.87 percent (N2.89trn) from turnover in May 2022 and June 2021 respectively.
Total turnover for Spot and Derivatives Market was N16.19trillion and N2.01trillion respectively in June 2022. Spot FX Market Turnover was N2.99trillion ($7.10bn) in June 2022, representing a MoM increase of 8.30 percent (N0.23trn) from the turnover recorded in May 2022 (N2.76trn).
“Total market turnover in the half year period of 2022 stood at N96.45 trillion representing an increase of 5.87 percent year-on-year compared with N91.1 trillion recorded in the same of 2021. By implication, investors committed additional N5.35 trillion into the FIC market in 2022 as against the figures recorded in 2021”
Further, the Naira depreciated against the US Dollar, losing 0.44 percent ($/N1.83) to close at an average of $/N420.98 in June 2022 from $/N419.15 recorded in May 2022, trading within a range of $/N419.00 – $/N425.50.
Similarly, in the Derivatives Market, total turnover in the FX Market segment was N2.01trillion ($4.79bn), representing a MoM increase of 5.51 percent (N0.10trn) from May 2022.
Turnover in FMDQ markets for the month ended May 31, 2022 was N15.39trn, representing a MoM decrease of 20.42 percent (3.95trn) and YoY increase of 50.29 percent (N5.15trn), respectively. OMO, CBN Special Bills and Foreign Exchange (FX)transactions were the highest contributors to the FMDQ markets turnover in May 2022, jointly accounting for 63.03% of the total FMDQ markets turnover.
Turnover in FMDQ markets for the month ended April 29, 2022 was N19.34trn, representing a MoM and YoY increase of 27.57 percent (N4.18trn) and 19.53 percent (N3.16trn), respectively. Foreign Exchange (FX) and Money Market transactions were the highest contributors to the FMDQ markets turnover in April 2022, jointly accounting for 64.08 percent of the total FMDQ markets turnover.
The DMO sold T.bills valued at N289.09bn across its auctions in April 2022. Although this exceeded the amount offered (N262.33bn) indicating the sustained demand for T.bills, it represents a 29.61 percent (N121.63bn) MoM decrease in T.bills sold relative to March 2022 (N410.72bn).
In April 2022, the DMO reopened the 10Y and 20Y FGN Bonds and issued a new 10Y FGN Bond, with the total value of bonds sold equaling N348.58bn indicating its sustained demand , representing a 17.36 percent (N51.57bn) MoM increase from March 2022 figures for the reopened issues.
However, the CBN did not auction OMO Bills in the primary market in April 2022 compared to N170.00bn worth of OMO Bills sold in March 2022.
