In the month of October, the FMDQ Securities market demonstrated noteworthy financial activity, boasting a total turnover of N21.7 trillion in its secondary market. While this figure indicates a month-on-month (MoM) decrease of 6.8%, equivalent to ₦1.57 trillion, it also signifies a substantial year-on-year (YoY) surge of 60.27%, amounting to ₦8.16 trillion when compared to the figures recorded in October 2022 and September 2023, respectively.
A closer examination of the activities within this period reveals that the secondary market was predominantly influenced by transactions in the money market and foreign exchange (FX), collectively constituting an impressive 80.7% of the overall turnover. The money market and FX transactions, in particular, played a pivotal role in shaping the dynamics of the secondary market.
Moving on to the spot market, the total turnover for all products traded in October 2023 amounted to ₦20.5 trillion. However, this figure reflects a modest month-on-month decrease of 4.02%, translating to ₦0.86 trillion, when juxtaposed with the figures from September 2023. The decline in total spot market turnover is attributed to a dual impact, with a substantial 38.24% decrease (₦3.04 trillion) in money market turnover and an 11.89% decrease (₦0.49 trillion) in foreign exchange turnover. Intriguingly, these declines offset the positive momentum generated by a noteworthy 29.04% increase (₦2.68 trillion) in Fixed Income turnover, FMDQ.
Delving deeper into the specifics, the dip in money market turnover can be dissected into contributing factors such as a decrease in repos/buy-backs and unsecured placement/takings transactions. Conversely, the surge in Fixed Income turnover is attributed to a month-on-month increase across all Fixed Income products, with the exception of T.Bills and FGN Bonds, which experienced a decline during the review period, FMDQ.
Shifting focus to the spot FX market, the turnover stood at $4.66 billion (₦3.66 trillion), indicating a 14.96% month-on-month decrease of $0.82 billion from the turnover recorded in September 2023 ($5.48 billion). During this period, the dollar appreciated against the Naira, with the spot exchange rate ($/₦) increasing by 5.34% ($/₦40.41) to close at an average of $/₦797.43 in October 2023, up from $/₦757.02 in September 2023. Moreover, exchange rate volatility witnessed an uptick as the Naira traded within a range of $/₦741.85 – $/₦993.82, compared to the range of $/₦722.39 – $/₦780.00 recorded in the preceding month.
In the realm of fixed income, the turnover reached ₦11.91 trillion in October 2023, showcasing a robust month-on-month increase of 29.04% (₦2.68 trillion) from the turnover recorded in September 2023 (₦9.23 trillion). This surge in Fixed Income market turnover was fueled by a 5.10% increase (₦0.15 trillion) in OMO Bills, an impressive 170.76% surge (₦2.92 trillion) in CBN Special Bills, and a commendable 24.06% rise (₦0.01 trillion) in Other Bonds. However, it’s important to note a 12.28% decrease (₦0.28 trillion) in T.Bills transactions and a 5.68% decline (₦0.13 trillion) in FGN Bonds transactions during the same period. This led to a nuanced impact on trading intensity (TI), with T.Bills and FGN bonds experiencing a decrease in TI by 0.06 and 0.01, settling at 0.42 and 0.11, respectively, FMDQ.
A more granular breakdown of activities within the fixed income segment indicates that T.Bills and FGN Bonds within the >6M – 12M and >20Y tenors, respectively, were the most traded sovereign Fixed Income securities. These securities accounted for 33.97% (₦1.41 trillion) and 19.06% (₦0.79 trillion) of the secondary market turnover for sovereign Fixed Income securities in the spot market, respectively.
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Simultaneously, in the money market segment, the total turnover experienced a notable month-on-month decrease of 38.24% (₦3.04 trillion), culminating in ₦4.91 trillion. This decrease was propelled by a substantial 36.03% decline (₦2.72 trillion) in repos/buy-backs and an 80.00% decrease (₦0.32 trillion) in unsecured placement/takings transactions.
Nevertheless, the financial landscape, as reflected in the FMDQ Securities market data for October 2023, showcases a complex interplay of market forces, where fluctuations in various segments contribute to the overall narrative of market dynamics, FMDQ.
