The Market Today - 10 April 2018
Crude oil theft poses a revenue challenge
Shell Petroleum Development Company reported a 50% jump in crude oil theft to 9,000 b/d in 2017, mainly due to significantly higher oil volumes as a result of the revival of shipments from the Forcados terminal which was moribund for most of 2016. Highlighting that the operating environment remained little changed despite the nominal spike in crude oil theft, the company warned that theft and sabotage continue to hold the industry back. We recall that a few years ago, Oilprice.com (a leading oil & gas data platform) reported that Nigeria had the highest incidence of oil theft in the world. This poses a challenge to a country that remains dependent on oil sales for federal and export revenues, and is symptomatic of continued insecurity in the oil producing Niger Delta.
Industrials weigh on NSE
The Nigerian equity market shed 101bps at week open as heavy losses in Industrial stocks soured the day’s trading. With the heavy pressure on large cap stocks and widely negative market breadth, we anticipate another bearish trading session today.
Stock Watch: After hitting a 45-session low of ₦0.62, AIICO has begun an uptrend and has so far advanced 13% over six sessions. The Insurance company has returned 35% Ytd.
Healthy liquidity spurs positive start
Interbank call rate moderated 34bps to 3.33% as system liquidity remained buoyant in the absence of CBN liquidity mop up. Trading in the T-bills market began the week on a relatively bullish note as yields declined 9bps on average. Buy sentiment was spread evenly across durations as yields on the 17DTM (-44bps), 164DTM (-29bps), and 213DTM (-89bps) bills moderated to 12.51%, 14.05%, and 14.71% respectively. Trading in the bond market was relatively quiet albeit with notable buying on benchmark bonds. In particular, yields on the 16.00% FGN JUN 2019, 14.50% FGN JUL 2021, and 12.50% FGN JAN 2026 bonds moderated 13bps, 8bps, and 4bps to close at 13.66%, 13.65%, and 13.67% respectively. We expect healthy liquidity conditions to further support buying in today’s session, barring OMO auction by the CBN.
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