Breakfast Report - 05 July 2021
The Nigerian economy could be getting a boost from two key events that occurred recently - the easing of OPEC+ production cuts and the passage of the Petroleum Industry Bill after a 12-year hiatus. However, we note that the continuous spread of infectious variants could stall demand recovery. On the supply side, increasing demand for renewable energy could hold back investments in fossil fuels, alongside the risk of new supply from Iran. Nevertheless, these tailwinds could accelerate the recovery of the oil sector in the second half of the year. Although the oil sector constitutes less than 10% of the Nigerian economy, a pick-up in the oil sector could reverberate across the economy in form of higher oil exports, reserve accretion, and convergence in the foreign exchange market.
Equity: We anticipate a mixed session to start off this week’s trading, coupled with weak turnover as investors continue to wait on the sidelines for half-year earnings results
Fixed Income: Given the tightened level of system liquidity, we expect the market to resume next week on a similarly mixed note, with majority of trades conducted in the bonds space. Furthermore, we foresee quiet trading in the NTB market, while OMO activity should remain bearish.
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