Breakfast Report - 16 July, 2018

Two months after the Shell Petroleum Development Company of Nigeria Limited (SPDC) declared Force Majeure on the Bonny Light exports, the company announced that it has now been lifted, indicating resumption of normal loading activities from the Bonny terminal. The Force Majeure was initially placed after the shutdown of the Nembe Creek Trunk Line after a leak was found on the pipeline which feeds the Bonny terminal. Given this development, Nigeria’s recent oil lifting challenges are nearly behind and we expect to see an uptick in oil production in the coming months, a boon for Nigeria’s export earnings and government revenues.                                                                                                           

Equity: Bulls emerged on the bourse on Friday, helping all key sectors to green closes, as the ASI inched 45bps higher. Despite this, prior losses led the ASI to a 62bps w/w loss. After a largely bearish week, bargain hunting supported the market to a positive close at week close. However, we note that sentiment remained weak – evidenced by still negative market breadth. Hence, we foresee tepid performance for the market today.                                                                                                                                                                                                                                                                                                                                                                        Stock Watch: TRANSCORP has declined 14% over the last twelve sessions, dipping 160bps on Friday. The stock currently trades at a year-low of ₦1.23 and has declined 16% YTD.                                                                           

Fixed Income: Buying should persist today in the expected absence of liquidity mop ups, with activity likely concentrated on T-bills.