The Market Today - 24 August 2018

Nigeria’s oil earnings surge in 2018                                                        

According to a recently released Organization of Petroleum Exporting Countries (OPEC) revenues fact sheet published by the US Energy Information Administration (EIA), the 15 members of OPEC recorded a combined net oil export revenue of $428 billion between January and July 2018. Nigeria accounted for c.6% of this figure ($27 billion) and was the sixth highest earner, with Saudi Arabia topping the list with a reported $130 billion in revenue for the period. While the report showed that Nigeria recorded a total of $34 billion in net oil export revenue in 2017, annualizing the current ytd figure shows a potential FY’2018 revenue figure of $46 billion. Whilst we expect oil revenue for the rest of the year to be supported by a recovery in oil volumes in the coming months, we note that global oil prices are likely to be lower in H2’18 amid production increases in the U.S., Russia, and larger OPEC nations.                

Market resumes on a high note as Industrials boost                                                      

"Resuming the two-day break in positive territory, the All-Share Index rose 157bps following another wild upward swing from market heavyweight DANGCEM. Despite a positive close to trading yesterday, underlying market sentiment remains negative, with intraday trading down for most of the session, thus, we foresee a mixed to negative close to the shortened week.                   

Stock Watch: FIDELITYBK has announced a closed period on their shares pending the release of the company’s H1’18 results. The stock has posted nine losses in the last eleven sessions closing at ₦1.58, a ytd loss of 36% (Banking: -11%).                                                            

Yields moderate as buying boosts market                                                          

"Amidst a ₦364 billion OMO maturity, the CBN conducted an OMO auction yesterday, offering ₦400 billion and selling ₦97.9 billion across the 91DTM and 203DTM tenors at 11.05% and 12.15% respectively. Driven by the net maturity, the interbank call rate declined 200bps to 6.83%. Meanwhile, trading remained positive across the T-bills space, with yields declining 6bps on average. Demand was evident across the space, with notable yield moderations on the 42DTM (34bps down to 11.48%) and 175DTM (37bps down to 12.95%). However, trading in the bond space was mixed, albeit with a positive tilt with yields moderating 4bps on average. Furthermore, buying was concentrated on short to mid-dated maturities, with notable yield moderations on the 15.54% FGN FEB 2020 bond (moderated 28bps to settle at 13.90%).