BREAKFAST REPORT: THE WEEK AHEAD, STOCK WATCH & RECOMMENDATIONS FOR THE WEEK

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The Organization of Petroleum Exporting Countries (OPEC) would hold a joint meeting with partner non-OPEC nations on Friday, June 22nd to review existing output caps and determine next steps for supply in the market. The deal, which has been in existence since January 2017, has been successful at supporting prices – which briefly peaked at $80/bbl in May – as compliance has consistently been above 100%.

The deal is set to expire at the end of the year, but may be amended early as member countries try to prevent a supply shortage that would affect the global economy. Moreover, oil prices are likely to be supported by existing geopolitical risks, such as the U.S. sanctions on Iran and a bleak global trade picture, as well as declining production in Mexico. Given these factors, member countries may be encouraged to ease the current output agreement in order to benefit from higher export volumes.

Equity:

Negative trading persisted at the end of last week as the ASI ended Thursday in the red (-26bps) albeit closing the week 67bps higher on the back of gains earlier in the week. Trading was mixed last week as profit-taking at week close followed relatively strong gains earlier in the week. We foresee bargain hunting today as investors swoop on slightly beaten down stocks.

Stock Watch:

Dubai based Abraaj Group recently filed for liquidation due to financial strains. The Private Equity firm recently invested in CILEASING, CUSTODIAN and CWG. The stocks have returned 34%, 35% and 0% YTD respectively.

Fixed Income:

We expect Thursday’s liquidity inflows to support some buying today, barring any liquidity mop up by the CBN.

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