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Breakfast Report - 11 February, 2019

The Week Ahead                                                       

Newly appointed Chief Economist for the IMF, Gita Gopinath, recently stated her support for the U.S. Fed’s decision to shelve its normalization policy in the short term. According to her, the decision should provide support to a global economy that has already begun to feel the impact of a trade war. That said, Gita highlighted some lingering concerns to global economic outlook, noting major downward revisions to key European economies’ (German and Italian) growth outlooks. Notably, Ms. Gopinath expressed a cautious outlook for the UK amidst a rising possibility of a “No deal” Brexit, which would have a larger impact on trade and finance in the region.                                                      

Equity: Following five consecutive sessions in positive territory, the NSE ASI gained 2.92% last week. Positive market performance has been driven by bargain hunters with increased activity from both local and foreign players. We expect the positive trend to persist this week, buoyed by sustained interest on select stocks even as investors position to take advantage of a possible post-election rally.                                               

Stock Watch: DANGFLOUR was the runner-up for the best performing stock last week, gaining 18% in four out of five sessions. The stock gained 8% on Friday to close at ₦6.85, trading at its highest price since March 2018.                                                 

Fixed Income: Whilst we anticipate continued interest in the bond market this week amidst a resurgence in FPI inflows, we also foresee sustained tepid trading in the T-bills market as the CBN maintains pressure on liquidity.