April 14, 2020/Coronation Report

The Nigerian Stock Exchange All-Share Index (NSE-ASI) staged a rally last week (see Model Equity Portfolio), reflecting optimism. Part of that optimism came from market speculation, later confirmed, of a deal between the US, OPEC and Russia to reduce oil production.

But oil prices have barely rallied and Brent crude, at US$32.12/bbl, is well short of the US$50.00 – US$60.00/bbl range that signals Nigeria’s comfort zone for its own oil earnings and for foreign portfolio investment.

Although financial support for Nigeria is likely to come from the IMF and the World Bank, these will be short-term measures designed to address the coronavirus pandemic. Over a period of two years (the medium term) low oil prices are likely to present difficult challenges.

Click here to read full PDF copy of report