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

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A technical committee of members of the Organization of Petroleum Exporting Countries (OPEC) and its non-OPEC allies are due to finalize on how to apportion the extra 1 million barrels a day of crude oil production agreed at the June meeting. So far, Russia and Saudi Arabia have accounted for most of the increase in OPEC production as producers such as Iran and Venezuela remain constrained. However, smaller producers are pushing for a more equitable split of the allocation, and some reports suggest that as many as four different proposals are on the table.

Although these discussions are unlikely to impact the groups’ aggregate production, deeper rifts among the major players could cast doubts over the strength of any 2019 production agreement between OPEC and its allies. Nevertheless, oil prices are expected to remain resilient, supported by a slump in exports from Iran, one of the most vocal members of OPEC.

Equity:

The market closed out last week in the red, shedding 21bps to take the ASI to a YTD loss of 11%. Market breadth was broadly negative throughout the week but narrowed in the last session. Though we expect stronger bargain hunting at the start of the week, underlying investor apathy for Nigerian stocks is expected to drive most trading sessions into negative territory in the coming week.

Stock Watch:

WAPCO hit a nine-year low of ₦23.00 on Friday. The stock has lost 48% of its value YTD and is significantly underperforming the Industrial Goods sector (YTD: -17%).

Fixed Income:

We anticipate a bearish start the week’s trading given the strong sell sentiment in the fixed income market at week close.

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