The Market Today - 22 June 2018
OPEC meets today, should push through production hike
The Organization of the Petroleum Exporting Countries (OPEC) and partner non-OPEC countries meet today to determine the fate of the current oil deal. The group is looking to ease existing output caps to compensate for declining production in countries like Venezuela, as well as improving global demand, which has raised concerns over a supply deficit in the short-term. Nevertheless, Iran, OPEC’s third largest producer and the victim of United Sanctions on oil exports, has expressed an unwillingness to alter the current arrangement and may stall discussions. We expect the deal to remain in place till year-end, with the two groups agreeing on a production increase, and we expect this to put some pressure on oil prices.
DANGCEM weighs on Nigerian bourse
Losses became more pronounced on the Nigerian Stock Exchange yesterday after an early session dip in DANGCEM, dragged the ASI 117bps lower. With many stocks remaining on the offer cart at market close, we anticipate a negative open to the market today.
Stock Watch: FBNH has shed 5% in the last five sessions. The stock currently trades at a price of ₦10.60 and has returned 20% YTD, compared to the Banking sector’s flat YTD performance. FBNH was amongst the top traded stocks on the day by volume and value.
Mixed sentiment persists in fixed income market
Deviating from recent trend, the CBN held off on conducting an OMO auction yesterday, despite a ₦378 billion OMO maturity. Consequently, Interbank call rate declined 950bps to 3.00% (previous: 12.50%). Interestingly, sentiment in the T-bills market remained mixed with a bearish bias, with yields advancing 6bps on average. Meanwhile, trading in the bond space was negative, with yields on benchmark bonds rising 8bps on average. Barring a CBN liquidity mop-up today, we foresee improved demand in the market today amidst buoyant system liquidity (₦478 billion).
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