I think this bulletin will help most of our BNSITL to understand today's MPC decision...

MPC Plays It Safe

The MPC made a tacit move towards the easing of interest rates and an accommodative posture, by

allowing for the harmonization of the cash reserves ratios to 31%, from 75% and 20% on the public and

private sectors respectively. System-wide deposits are in a 60:40 ratio between the public and private

sector. Based on this, the harmonization will lead to a net inflow of approximately 28% of total deposits.

This is an equivalent of 8 times the average monthly FAAC allocation. In May, the FAAC allocation was

N388bn. In the past 6 months the statutory inflows have led to a sharp decline in interbank rates towards

10.5%p.a.

The major beneficiaries of this new dispensation are the tier 1 banks mainly: FBN, Zenith and UBA. The

private sector dependent institutions like Stanbic IBTC, Standard Chartered and Citi Bank will face

challenges.

The Nigerian economy has just reported a sharp decline in real GDP growth from 5.96% in Q4’14 to

3.96% in Q1’15. This slow growth coincides with an increase in consumer prices from 8.5% in March to

8.7% in April. Hence, the economy is threatened with early stages of stagflation. This has created a policy

dilemma of either stimulating growth or targeting price stability. Since the rate of decline in economic

growth (1.98%) outweighs the uptick (0.2%) in inflation, the CBN has made a tactical and strategic move

towards monetary policy easing.

The CBN seems to be aligning itself with a possible fiscal stance of the Buhari-team. The new

administration is likely to embark on a fiscal stimulus meant to jumpstart economic activity and help the

economy out of its stagflation state. The CBN stayed away from the thorny issue of the value of the naira

and made no move towards devaluation. This helps to keep the door-wide open for the new government

to deal with the hydra-headed problem of fuel subsidies .


Implications

Money Market

The increase in money supply aggregates could stoke inflationary pressures and we could see the inflation

figures move towards 11%. The positive fallout of an increase in money supply is a shift in the aggregate

demand curve followed by an increase in aggregate output .

Interest Rates

Interest rates usually move in tandem with market liquidity conditions. We anticipate a decline in average

NIBOR to a range of 8% p.a.- 10% p.a. from the current level of 26% p.a.- 30% p.a.

Forex Market

The forex market has stabilized at N198/$ at the interbank market and at N221/$ at the parallel market

since the last MPC meeting in March. The anticipated increase in money market liquidity will heighten the

speculative pressure on the currency. The current spread of N23 between the two segments of the foreign

exchange market will diverge further.

Capital Market

Fixed Income

There is an inverse relationship between the price of assets and interest rates. A decline in rates will lead

to an increase in the prices of bonds and stocks, great news for the institutional investors and fund

managers. The stock market is expected to rally as a result.

Policy comparison

Major SSA countries recently maintained their monetary policy stance except for Ghana that increased its

MPR by 100bps to 22%p.a. This is due to the increased inflationary pressures and depreciating currencies.

Specifically in Ghana, the currency has depreciated by 20.32% YTD against the dollar and inflation

increased from 16.6% to 16.8%.

Meanwhile, the lower cost of imported oil has reduced the incentive to increase interest rates across SSA

countries. However, Nigeria and Angola, the major oil producers are battling currency pressures, low

foreign reserves and inflation.

Table 1: Policy Comparison

Exchange Rate (%

change YTD)

April Inflation

(%)
Benchmark Interest Rate

(% p.a)

External Reserves

($’bn)

Money supply Growth

(%)

Nigeria 0.19 8.70↑ 13.00 « 29.81 15.56↑

Angola 2.56 8.23↑ 9.25 « 2 5 1.51↑

Ghana 8.22 16.80↑ 22.00 ↑ 5.4

Kenya 4.41 7.08↑ 8.50 « 9 0.81↑

South Africa 0.29↑ 4.00↑ 5.75 « 39.7 2.26↑

Source : NBS, FDC Research , BOG, TradingEconomics.com

What Next?

The immediate effect of the harmonization of the CRR increases system liquidity which ultimately heightens

the demand pressure on the currency.

Although the CBN has addressed the immediate problem of slowing growth, the apex bank will still have to

contend with exchange rate pressures in the medium term and this may coincide with the subsidy issue. In

the end, the CBN will have to determine an efficient exchange rate determining mechanism.


http://www.proshareng.com/reports/8250/FDC-Economic-Bulletin---May-19,--2015-Proshare

Thanks 08mrjoy

Toluway:
The National Association of Securities Dealers (NASD) is a trading platform for secondary market transactions of unquoted/unlisted public limited companies in Nigeria.  The NASD, also known as OTC (OVER THE COUNTER) is a market for unquoted securities.
Operators in this environment include issuers of Equity and fixed income instruments, institutional and individual investors, settlement banks, clearing houses, private equity and venture capital firms with a view to increasing liquidity in the unquoted segment of the long-term market.  Forthright Securities and Investment Limited is one of the accredited authorised traders in this market.
Some of the securities currently being traded on the NASD platform are: FRIESLAND CAMPINA NIGERIA PLC, BGL PLC, ARM LIFE PLC, ARM PROPERTIES PLC, IKEJA ELECTRICITY DISTRIBUTION PLC, AFRILAND PROPERTIES PLC, CSCS NIGERIA PLC, NIGER DELTA EXPLORATION PLC, amongst others.
Take advantage

Not explicit enough. How do we take advantage as required if we intend to.

Men in black! Sai Buhari

Agbalowomeri:
Men in black! Sai Buhari

U know dey sleep? Abi...?

myjoy08:


U know dey sleep? Abi...?

Is that what he ask you to do?. myjoy08 for example if you have uba can you sell it this week? if yes tell me why and if know let me know?.

myjoy08:


U know dey sleep? Abi...?

Is that what he ask you to do?. chibuking81 for example if you have uba can you sell it this week? if yes tell me why and if know let me know?.

Not explicit enough. How do we take advantage as required if we intend to.
(Quote ) ( Report) (Like ) (Share )

These are are being traded like the normal stocks, but not listed in the stock exchange market. They are called secondary markets.
You will simply buy them the way you buy the normal stocks and sell when you meet your profit target.

One of the dealers of this type of transaction is a brokerage firm, namely, Fortright Securities and investment limited.

ihedioramma:
Is that what he ask you to do?. chibuking81 for example if you have uba can you sell it this week? if yes tell me why and if know let me know?.

UBA is a good bank, but considering the camp of their CEO, I doubt whether the new government will favour them, for now I prefer first bank ahead of UBA, for now I don't have UBA in my portfolio.

Toluway:
Not explicit enough. How do we take advantage as required if we intend to.
(Quote ) ( Report) (Like ) (Share )

These are are being traded like the normal stocks, but not listed in the stock exchange market.
You will simply buy them the way you buy the normal stocks and sell when you meet your profit target.

One of the dealers of this type of transaction is a brokerage firm, namely, Fortright Securities limited.

Bros u sure say those securities dey change price? I never see anyone wey don change price o

Chibuking81:
UBA is a good bank, but considering the camp of their CEO, I doubt whether the new government will favour them, for now I prefer first bank ahead of UBA, for now I don't have UBA in my portfolio.

Bros no policy can favour one bank and leave the others out

All hail the roaring bull! Abeg who see Aks? 42,000 here we come

Toluway:

These are are being traded like the normal stocks, but not listed in the stock exchange market. They are called secondary markets.
You will simply buy them the way you buy the normal stocks and sell when you meet your profit target.
One of the dealers of this type of transaction is a brokerage firm, namely, Fortright Securities and investment limited.

Thanks. Pls a few questions sir:

1. Does any of the brokers have an online trading platform?
2.Do these companies give dividends and bonuses?
3. What advantages does one stand to gain?
4. What are the key risks investors are exposed to?

It is dividends season and I came across this.

http://groupssa.com/understandingdividenddates.html

Cheers

ihedioramma:
Is that what he ask you to do?. myjoy08 for example if you have uba can you sell it this week? if yes tell me why and if know let me know?.

Sell it this week? Absolutely No! UBA still has many upsides potential likewise some other banks when anti-banks policy is being ease or remove along their way...And on the other hand, it depends on when u enter and whether u have achieved your target?

In the voice of my friend, Sir Agba: why sell within one month for 12% when u can make more than 80% in the next 5 months...(The term applies to the smart traders)!

myjoy08:


Sell it this week? Absolutely No! UBA still has many upsides potential likewise some other banks when anti-banks policy is being ease or remove along their way...And on the other hand, it depends on when u enter and whether u have achieved your target?

In the voice of my friend, Sir Agba: why sell within one month for 12% when u can make more than 80% in the next 5 months...(The term applies to the smart traders)!

Wise words! More like 2-4 months!

Kagame:


The outcome of the MPC meeting does not look like it would alter the current dynamics of the markets.

If I am not mistaken, FG has begun the implementation of the Treasury Single Account (TSA) ,which means all monies belonging and accruable to the FG,parastatals and MDAs are currently domiciled with the Central Bank of Nigeria (CBN). Hence, a reduction on CRR on public sector deposits is simply an official adjustment to existing realities.

I would rather be a bit worried because the MPC seems to have increased the CRR on private sector deposits, while still retaining the liquidity ratio at 30%.

The net effect would likely be poor liquidity and an increase in the cost of funds for banks and financial institutions.

I have confirmed that the TSA has not been implemented so my analysis on that basis is entirely wrong.

Instead the new policy rates would have the opposite effect than I postulated above.

I was wrong.

Kagame:


I have confirmed that the TSA has not been implemented so my analysis on that basis is entirely wrong.

Instead the new policy rates would have the opposite effect than I postulated above.

I was wrong.

Kagame:


I have confirmed that the TSA has not been implemented so my analysis on that basis is entirely wrong.

Instead the new policy rates would have the opposite effect than I postulated above.

I was wrong.

Single treasury has been implemented for federal govt accounts. However, banks that hold state and lg accounts will have money to swim in.

Pre-market bids order are really looking good for banking stocks as at this minutes...lol

mercylicious:


Single treasury has been implemented for federal govt accounts. However, banks that hold state and lg accounts will have money to swim in.

Hence why Skye is a lucky bank!

paulcube:
Hence why Skye is a lucky bank!

Skye at N5.... 2 months time frame...

Agbalowomeri:
Men in black! Sai Buhari

Which of the Sai buhari? the General/president elect or NSEMPA?

Chibuking81:
UBA is a good bank, but considering the camp of their CEO, I doubt whether the new government will favour them, for now I prefer first bank ahead of UBA, for now I don't have UBA in my portfolio.

UBA is a good stock that still have an upside potential.

mercylicious:


Single treasury has been implemented for federal govt accounts. However, banks that hold state and lg accounts will have money to swim in.

Yea Mercy I read that somewhere too ,but other news outlets like businessday are giving the impression that the incoming Buhari administration would be the one to implement it .

I have also noticed a divergence in the analysis of the outcome of the MPC meeting. Analysts at standard chartered bank are of the opinion that the resultant effect would be a liquidity tightening ,while other analysts who happen to be in the majority think otherwise.

For clarity, it would be nice if we can decipher how much would be sterilized or injected into the market.

AIRLINE SERVICE & LOGISTICS

Proposed Bonus: Nil

Proposed Dividend: 15Kobo

Qualification Date: June 12, 2015

Closure Date: June 15, 2015 to June 19, 2015 (both days inclusive)

Annual General Meeting: July 2, 2015

Payment Date: July 3, 2015

Kagame:


Yea Mercy I read that somewhere too ,but other news outlets like businessday are giving the impression that the incoming Buhari administration would be the one to implement it .

I have also noticed a divergence in the analysis of the outcome of the MPC meeting. Analysts at standard chartered bank are of the opinion that the resultant effect would be a liquidity tightening ,while other analysts who happen to be in the majority think otherwise.

For clarity, it would be nice if we can decipher how much would be sterilized or injected into the market.

How can any analyst say it will lead to liquidity tightening?

anyway pls do post the link for that StanChart analyst make we look am well! maybe they are seeing something I cannot see from the bar beach where I am now..

I don enter Skye oooo.

Pure gambling on mpc news. Dem carry Lagos state funds
.

House, what's happening on Lasaco....?

mercylicious:
I don enter Skye oooo.

Pure gambling on mpc news. Dem carry Lagos state funds
.

wise move!

paulcube:
wise move!

HMMMM! ONLY TIME WILL TELL!