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The Market Today - 12 June 2018

                                                               

Pipeline leaks hamper crude oil exports                                                             

As an indicator of the effect of recent pipeline disruptions in the Niger Delta, Nigeria’s crude oil loading plans for July showed the country may ship just 1.43 mb/d in the month, down from a June loading rate of 1.80 mb/d. This has arisen as a result of challenges to Bonny Light production as Force Majeure was declared by Shell Petroleum Development Company of Nigeria after they found four leaks on the Nembe Creek Trunk pipeline. In addition, although the Trans-Forcados pipeline is up and running, the existence of another leak will depress output, and unsurprisingly, Forcados cargoes is expected to dip from 10 to 7 in July. Whilst we note that Nigeria’s loading programs are prone to revisions, the expected dip in the July programme is symptomatic of recent production challenges that must be resolved to un-constrain the country’s crude output.                                                   

NSE ASI back in the green at week open                                                              

The Nigerian bourse kicked off the week with a reversal as the ASI rose rose 46bps. After closing last Friday in the red, the bourse jumped back into the green despite red closes across a few key sectors. We believe underlying market sentiment has turned mixed and foresee only a mild bullish bias in today’s session.                                                        

Stock Watch: STERLNBANK has gained 11% over the last five sessions. The stock currently trades at a price of N1.36 and has returned 26% YTD compared to the Banking sectors’ 4% YTD return.                      

Yields head in opposite directions to start the week                                                     

Despite the absence of a liquidity mop-up, the Interbank Call rate advanced to 11.83% (previous: 4.83%). Trading in the T-bills space was predominantly bullish even as yields declined 7bps on average.  Sentiment in the bond space was mixed with a bearish bias as yields on benchmark bonds advanced 3bps on average. Specifically, mild buying was observed on the shorter-dated bonds. Meanwhile, selling was weighted towards the longer-dated maturities. Whilst we expect another quiet session in the absence of market catalysts, we foresee some buying in the T-bills psace, supported by still-healthy system liquidity – barring any CBN liquidity mop up.