FMDQ says secondary market turnover down by 31.82% to N28.43trn

FMDQ Securities Exchange has released its financial markets monthly report for June 2024 which shows that the total secondary market turnover on FMDQ Exchange was N28.43trillion.

According to the report, the record level of secondary market turnover in June represents month-on-month (MoM) decrease of 31.82percent (N13.27trillion) and a year-on-year (YoY) increase of 30.77percent (N6.69trillion) from May 2024 and June 2023 figures, respectively.

It further shows that Foreign Exchange (FX) and Money Market (MM) transactions dominated secondary market activity, jointly accounting for 72.83percent of the total secondary market turnover in June 2024.

Total spot market turnover for all products traded in the secondary market in June 2024 was N25.95trillion, representing a MoM decrease of 35.16percent (N14.07trillion) from May 2024 figures.

The financial markets monthly report shows the month-on-month decrease in total spot market turnover was driven by the decrease in turnover across all spot market product categories, as FX, fixed income (FI) and money market (MM) turnover decreased MoM by 38.84 percent (N6.35trillion), 30.47percent (N3.38trillion) and 34.50percent (N4.33trillion), respectively. The decrease in MM turnover was driven by the MoM decrease in Repos/Buy-backs and Unsecured Placement/Takings transactions.

Similarly, the decline in FI turnover was driven by the decrease in FGN Bonds, T.bills, OMO Bills, and CBN Special bills offsetting the increase in Other Bonds. The Spot FX market turnover was $6.72billion (N10.01trillion) in June 2024, representing a 41.17percent ($4.70billion) MoM decrease from the turnover recorded in May 2024 ($11.42billion).

In the FX Market, the Naira depreciated against the US Dollar, with the spot exchange rate ($/N) increasing by 3.61percent ($/N51.87) to close at an average of $/N1,487.74 in June 2024 from $/N1,435.87 recorded in May 2024. Further, exchange rate volatility decreased in June 2024 as the Naira traded within an exchange rate range of $/N1,473.66 – $/N1,510.10 compared to $/N1,173.88 – $/N1,533.99 recorded in May 2024.

The report further shows that fixed income market turnover in June 2024 was N7.72trillion, representing a MoM decrease of 30.47percent (N3.38trillion) from the turnover recorded in May 2024 (N11.10trillion).

The MoM decrease in turnover was driven by the decrease in turnover across all FI product categories offsetting the 60.51percent (N0.02trillion) increase in Other Bonds transactions.

As a result, the trading intensity (TI) for FGN Bonds and T.Bills decreased MoM by 0.19 basis points (bps) and 0.03bps to 0.14 and to 0.05, respectively. T.bills with term-to-maturity (TTM) between >6M – 12M and FGN Bonds with TTM between >5Y – 10Y, were the most traded sovereign FI securities, accounting for 50.18percent (N1.56trillion) and 21.82percent (N680billlion) of the secondary market turnover for sovereign FI securities in the spot market, respectively.

“Although, the sovereign yield curve experienced a 0.04 percentage points (ppts) MoM increase in yield spread to -0.76ppts in June 2024, the yield curve remained inverted. Real (inflation-adjusted) yields remained negative across the yield curve in June 2024, declining further as rising inflation continues to outpace policy interest rates,” FMDQ Securities Exchange said in the report for June.

It further noted in the report that total turnover in the money market (MM) segment decreased MoM by 34.50percent (N4.33trillion) to N8.22trillion in June 2024.

“The MoM decrease was driven by the 34.74percent (N4.33trillion) and the 5.89percent (N5.40trillion) decrease in Repos/Buy-backs and Unsecured Placement/Takings transactions, respectively. The average Overnight (O/N) rate and Open Repos (OPR) rate (secured lending rate) increased MoM by 2.88ppts and 2.75ppts respectively, to close at an average of 27.49percent and 26.85percent in June 2024.

“Total turnover in the FX derivatives segment in June 2024 was $1.68billion (N2.48trillion), representing a MoM increase of 43.20percent ($0.51billion) from May 2024 figure ($1.17billion). The MoM increase in the FX derivatives turnover was driven by the 55.27percent ($570million) increase in FX Swaps offsetting the 39.65percent ($60million) decline in FX Forwards transactions while the FX Futures market remained inactive during the review period,” the report noted.