Breakfast Report - 19 June, 2017
​The Week Ahead
Nigeria’s Minister of State for Petroleum, Dr. Ibe Kachikwu revealed the strategy for meeting the 2019 target of self-sufficiency in petroleum products. Nigeria imports a bulk of its petroleum product needs and the Federal Government outlined its intention to address this in both the National Oil Policy and the Economic Recovery & Growth Plan. To achieve this, the ministry will seek to attract investment to fund the repair and upgrade of the three national refineries; strengthen support for private-led greenfield refinery projects such as the Dangote refinery; and create an enabling environment for mainstream modular refineries. Progress in achieving this would reduce Nigeria’s petroleum import bill and preserve foreign exchange while generating greater stability in the availability and prices of petroleum product in the country. Meanwhile, with a potential combined capacity above 150 million litres a day by 2019 (domestic demand under 50 million litres), steady operations at the three public refineries and the Dangote refinery would open up export opportunities for Nigeria, especially to neighbouring African countries.
The Nigerian bourse opened the week bearish, recording consecutive daily declines, before reversing sharply on Wednesday, driven by strong gains across all key sectors. The trend continued during the second half of the week amidst strong buying interest on select Banking stocks. With positive sentiment petering out with a flat close at the end of the week, the ASI notched a 160bps w/w gain.
Given the mixed trading pattern at week close, we foresee more cautious buying sentiment today, driven by increased profit-taking activity on select stocks.
Stock Watch: CCNN has rallied 92% in a sixteen-session bull run and now trades at ₦8.85, over a one-year high and above consensus target price of ₦6.92.
In the fixed income market, whilst we believe the spate of OMO mop-ups may cap demand in the T-bills space, we believe yields may trend lower this week as traders take a cue from the lower rate offered at Friday’s special OMO.
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