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The Market Today - 7 July 2017

Crude production ramps up in June

According to the Department of Petroleum Resources, Nigeria’s crude production for the month of June hit 2.05 million barrels per day (mbpd), the highest level since January 2016 (2.15 mbpd). Also, crude production for the quarter averaged 1.96 mbpd - highest figure since Q1’16 (2.05 mbpd average). We recall that in Q1’16, oil production was hit by increased militancy activities in the Niger Delta region which led to force majeure being placed on some large export terminals such as Forcados and Qua Iboe. With improved stability in the region in recent times and the lifting of the force majeure on these terminals, oil production has improved and looks to be approaching the 2.2 mbpd benchmark set by the FG in the 2017 budget. We believe that the increase in production should help to boost oil revenues amidst oil price pressure and consequently improve economic activities in the second half of the year.

Heavyweight DANCGEM lifts Nigerian bourse to green close

After trading lower for most of the session, the Nigerian equity market made a comeback towards the yesterday with the NSI ASI recording a marginal 16bps lift – largely supported by a late rally in DANGCEM. With the negative market mood being relatively unchanged, amidst the increasing trade value and advancing market breadth, we expect another mixed session on the Nigerian equity market today.

Stock Watch: GUINNESS has lost 13% in the last four sessions amidst the commencement of its ₦58 billion Rights Issue. The stock currently trades at ₦62.00, still above the Rights price of ₦58.00, posting a ytd return of -25%.

T-Bills trade mixed as CBN records “No sale” at OMO auction

Whilst the T-bills market sustained mixed trading yesterday, activity was tilted towards buying especially at the short end of the space amidst the liquidity improvement. However, the bond market turned slightly bearish with yields advancing marginally across the space. Given the “No sale” recorded at the auction today, we believe the CBN would conduct another auction at week close. In the secondary market, we expect further mixed trading at week close with buying activity tilted towards the short end as demand for maturities at this end of the market remains healthy. We however expect the tepid trading sentiment in the bond market to persist at week close.