Breakfast Report: The Week Ahead, Stock Watch & Recommendations – Vetiva

Breakfast Report: The Week Ahead, Stock Watch & Recommendations – Vetiva

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In its monthly oil market report, the Organization of Petroleum Exporting Countries (OPEC), revealed that oil production by the Federal Republic of Nigeria, rose by 8% in the month of July, to 1.95 mbpd. The oil cartel went on to further state that oil demand is expected to grow by 1.10mbpd y/y, revising down their target by 0.04 mbpd in large part due to the weaker-than-expected oil demand data. According to OPEC, non-OPEC oil supply is anticipated to grow by 1.97 mbpd y/y, a downward revision of 72,000 bpd from the previous month’s projection, due to lower-than-expected oil production in the US, Brazil, Thailand and Norway in H1’19. These were partially offset by higher production in Canada in Q2’19. We expect Nigeria’s daily oil production to peak at 2.3 mbpd with an average Brent price of $65/bbl.

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Equity:

The ASI recorded another week of massive declines as the market lost consecutively in three sessions, buoyed by persistent negative sentiment in the Banking and Consumer Goods Sectors. With the Presidency expected to assign portfolios to newly-appointed ministers this week, we expect sentiment in the equities market to remain general weak, as a result of uncertainty around the global space and frequent oil price volatility to weigh on the market.

Stock Watch:

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FCMB emerged as the best performing stock Friday after witnessing a +959bps price appreciation to close the week at ₦1.60. The stock traded at the year low price (₦1.46) for the year in last week’s trading session, before investors purchased the stock at current levels. The company reported an impressive half-year result where its Gross earnings and Profit After Tax increased by 9.43% and 32% respectively. FCMB share price has lost 15.34% YTD.

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Fixed Income:

by the continued advances in yields in both the T-bills and bond markets, investors remain bearish on the Nigerian economy. In addition, volatile energy prices will increasingly weigh on investors’ sentiment with regards to the Federal Government’s ability to generate sufficient fiscal revenues. As such, we foresee a mixed session with a bearish tilt at the start of next week.

Breakfast Report: The Week Ahead, Stock Watch & Recommendations – Vetiva Breakfast Report: The Week Ahead, Stock Watch & Recommendations – Vetiva

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