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Breakfast Report - 13 August, 2018

According to media outlets, Ethiopian Airlines is one of the bidder to set up and manage Nigeria’s new national air carrier, Nigeria Air. The airline is arguably one of the most successful national carriers on the continent, ahead of the likes of Kenya Airways and South African Airways and is one of the few national carriers that has not required government funding in recent years. We note that Ethiopian Airways has also been acquiring minority stake in a range of African airlines as it tries to deepen its penetration in the African airspace. Given the success of the Ethiopian model, they would be a credible and reasonable group to help execute Nigeria’s incoming national carrier.                                                                                                                     

Equity: The bourse drew to a -217bps close on Friday and a -289bps close for last week as negative sentiment continued to hamper the market, with all key sectors closing lower w/w. Whilst the notable dip in stock prices last week creates an opportunity for bargain hunters, we believe investor apathy, amidst unfavourable political developments, will remain a dampener this week.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

Stock Watch: DANGCEM is currently down 7% ytd trading at ₦214.00, its lowest price since October 2017. The stock lost 614bps on Friday, its largest daily loss in two months.                                                                            

Fixed Income: With sell pressure still evident in the bond space on Friday, we anticipate further negative trading today. However, we expect demand on T-bills to be supported by a ₦47 billion coupon payment on the 15.54% FGN FEB 2020 bond.