The Market Today - 07 December 2017
250,000 bpd refinery in the works for Nigeria
Nigeria’s push to end the importation of refined products has continued to attract investors into the industry. The CEO of Petrolex Oil & Gas Ltd. Mr. Segun Adebutu has stated that the company plans to build a $3.6 billion refinery with a capacity of 250,000 bpd with an expected completion date of 2021 in Ogun State. According to the CEO, Petrolex would finance the refinery project with loans from Nigerian banks and international lenders, as well as its own revenue. The company is following in the footsteps of the Dangote Group and Agip which have refinery projects of 650,000 bpd and 150,000 bpd respectively. We highlight these as positive steps towards achieving self-sufficiency in refined petroleum products, particularly in light of recent fuel scarcity scares in some states in the country.
Nigerian equity market maintains strong December run
The Nigerian bourse notched another strong green close today (NSE ASI up 151bps) amidst continued strong market activity. Given the strong positive closes across most key sectors, we expect the bulls to hold sway once again in today’s session, with buying tilted towards on-demand banking stocks.
Stock Watch: CADBURY has gained 31% in the last five sessions. The stock currently trades at ₦15.41, above Consensus target price of ₦10.20 and has returned 50% Ytd.
Bulls continue to feast in fixed income market
With the CBN holding off on OMO auction for the third consecutive day (first time in over 5 months), Interbank Call rate declined further to 13.83% (Previous: 16.00%). Buying interest strengthened in the fixed income market in the absence of liquidity mop up by the CBN. Particularly, yields in the T-bills market declined 68bbps on average. Similarly, yields on benchmark bonds moderated 10bps on average. We expect today’s ₦90 billion OMO maturity to support further buying in the fixed income market, barring any liquidity mop up by the CBN.
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