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

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Brent crude has rebounded from a 2018-low of $62.59/bbl in early February to open the week at $67.47/bbl. We recall that growing the United States oil production (above 10 mb/d for the first time in years) and risk-off sentiment in global markets this past month had weighed on global crude prices which had averaged above $69/bbl in January.

However, as Saudi Arabia touts the possibility of extended producer action to support prices – along with a structural framework to facilitate this, oil bulls have come back to the fore. Brent crude prices have also been propped by production disruptions in Libya and Papua New Guinea and a report by the U.S. Energy Information Administration showing a surprise drawdown in crude oil inventories. We expect prices to remain firm through the quarter, further supporting Nigeria’s revenue and economic prospects.

For the fourth consecutive session, the Nigerian equity market closed higher, gaining 74bps on gains across all key sectors. Notwithstanding, the All-Share Index still closed in negative territory last week, down – 16bps w/w due to heavier losses at the start of last week.

With market, breadth remaining markedly positive and as investors scramble to take positions before the flurry of FY’17 earnings, we foresee another positive session today

Stock Watch: PAINTCOM announced that its shareholders have agreed to a Scheme Agreement aimed at delisting the company from the Nigerian Stock Exchange. Under the Scheme, shareholders would be paid a cash consideration of ₦1.15 for every share held. The stock currently trades at ₦0.59 and has remained flat since 10th October 2017.

With liquidity still relatively healthy, we expect positive sentiment to persist in the fixed income space today, barring any CBN liquidity mop up.

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