Breakfast Report - 10 August, 2020
Last week Thursday, the International Monetary Fund (IMF) in its latest external report on the COVID-19 crisis, stated that it expects the COVID-19 pandemic to drag global oil demand lower, by c.8% for 2020. According to the fund, the impact of lower prices on oil trade balances will vary across economies, highlighting the dependence of oil exports and imports. The forecasted drop in demand by the fund is in line with other agencies such as the IEA and OPEC, who expect global demand to ease by 8.9mbpd in 2020 and remain pressured throughout 2021. The latest report, by both OPEC and the IMF, could spell troubling times for many oil-dependent nations, notably in the Middle East and Africa. Nigeria is no exception to this, as the nation’s economy remains driven by oil exports. The fall-out from the drop in crude oil receipts could weigh on the nation’s foreign reserves and constrain the nation’s liquidity if prices do not recover to pre-COVID levels. The country has seen its reserves fall from $45 billion in June 2019 to $35 billion in August 2020. In addition, the country is facing other challenges such as high import costs, capital flight and an inability to attract FDI. Furthermore, with a ratings downgrade, being one of the major fallouts of the slowdown in crude earnings, the nation could struggle to sell its debt to foreign investors.
Equity: Trading sessions for the week were characterized by bargain hunting as investors reacted positively to a number of earnings results released by bellwether stocks. However, despite the capital appreciation recorded this week, we still believe that current price levels remain good for long term investors, as a number of fundamentally sound stocks continue to trade below their fair values. We however advice cautious trading by investors in the short term in the face of market volatility.
Stock Watch: Just like other sessions last week, the Bulls again dominated on Friday as mid/large cap stocks such as UBN (+800bps), GUINNESS (+444bps), DANGSUGAR (+348bps), OKOMUOIL (+274bps), GUARANTY (+253bps), ACCESS (+236bps), UBA (+155bps), ZENITHBANK (+120bps) and WAPCO (+43bps) all closed higher.
Fixed Income: We expect the secondary fixed income space to start off the week on a tepid note, owing to the constrained level of liquidity amid a lack of suitable options for investors
Vetiva provides clients with independent and unbiased access to analysis and opinion. We keep our clients on the cutting edge of market information and provide up to date market intelligence on quoted companies. Our services allow brokers, investment firms, and asset managers focus their energies on developing investment strategies and client relationships.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.