EUR 120.10 For Business Accounts Only

Breakfast Report - 4th April 2016

Breakfast Report

The Week Ahead

A new version of the Petroleum Industry Bill prepared by the National Assembly which excludes, amongst others, the Strategic Host Community Development Fund as contained in the initial bill, is set to commence deliberations in the next few days. We think the removal of the “Fund” clause could stoke geopolitical tensions in the oil producing region of the country given the enormous support it has amassed.

As Nigeria’s fuel crisis continues, the NNPC has stated that the Kaduna refinery is expected to resume production by mid-April following the completion of repairs on the vandalized pipelines supplying crude oil to the refinery. Whilst this is positive news, we do not think it will materially ease the tight fuel supply in the country due to historically low and unreliable production.

Nigerian stocks ended Q1 on the negative, down 11.7% for the quarter as lackluster earnings season failed to lift investor sentiment. This past week, sell pressure emerged post dividend closure dates for top banks GUARANTY, ZENITHBANK and UBA with the sector dragging the overall market down. The NSE ASI however clinched the first gain of the week Thursday, buoyed by a strong investor appeal for Industrial blue chip DANGCEM. The ASI added to gains at week close following further advancement in Industrials and a rebound in Financials. However, late gains were not enough to offset earlier losses as the NSE ASI dipped 152bps w/w.

Notwithstanding the possibility of further bargain hunting across banks amidst depressed valuations, we think the renewed pressure on oil prices (Brent crude at $38/bbl – one month low) could soften market sentiment in the sessions ahead.