12 June 2018 ( Lagos ) : 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 analysts 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. 

Yields head in opposite directions to start the week 

Financial Market Update

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. Notably, yields on the 24DTM, 115DTM and 192DTM bills declined 32bps, 59bps and 29bps to settle at 12.75%, 12.74% and 12.92% respectively. 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 as yield on the 16.00% FGN JUN 2019 bond declined 5bps to settle at 12.10%. Meanwhile, selling was weighted towards the longer-dated maturities as yields on the 16.2884% FGN MAR 2027 and 12.1493% FGN JUL 2034 bonds advanced 18bps and 14bps to 13.48% and 13.68% respectively.

Whilst analyst expect another quiet session in the absence of market catalysts, they foresee some buying in the T-bills psace, supported by still- healthy system liquidity – barring any CBN liquidity mop up.

NSE ASI back in the green at week open 

The Nigerian bourse kicked off the week with a reversal as the ASI rose 46bps. 

The Banking (+105bps) sector led gainers following positive performances in ( UBN ) (+446bps), ( GUARANTY ) (+109bps) and ( ZENITHBANK ) (+92bps). Likewise, the Consumer Goods (+36bps) sector closed in the green, buoyed by advances in ( FLOURMILL ) (+185bps) and ( NB ) (+85bps) despite losses in ( DANGSUGAR ) (-50bps) and ( INTBREW ) (-12bps). The Industrial Goods (-89bps) sector however remained in negative territory at week open, no thanks to ( BOCGAS ) (- 497bps) and ( WAPCO ) (-188bps) dragged the sector. Similarly, the Oil & Gas sector shed 9bps to close in the red on the back of a loss in ( ETERNA ) (-473bps). 

Market breadth turned positive with 31 advances and 23 declines. 

Market Outlook 

After closing last Friday in the red, the bourse jumped back into the green despite red closes across a few key sectors. Analysts 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. 

Corporate Disclosures 

Chemical and Allied Products Plc. announced that the Annual General Meeting of the Company earlier scheduled for Monday 18th June 2018, will now be held on Tuesday 19th June, 2018 at Golden Tulip Festac, Amuwo-Odofin, Lagos State at 10.00am. 

Source: Vetiva Capital Management Limited.