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Breakfast Report - 21 August, 2017

The Week Ahead                                                    

In his first public address to the nation since his return to the country, President Buhari underlined that Nigeria’s unity is non-negotiable, charging the national security agencies to build on successes attained in the last two years to ensure peace and safety for all Nigerians. He further reiterated his commitment to tackling prevalent security concerns in the country from factions of Boko Haram, farmer-herdsmen clashes, kidnappings, and ethnic tensions. The President concluded his speech by assuring Nigerians that he was fully prepared to lead the push for economic, social and political development of the country. Given President Buhari’s tough stance on security, his speech would help assuage any worries over latent ethnic and security threats in the country. Nevertheless, with Vice President Yemi Osinbajo demonstrating a firm economic hand in his capacity as Acting President, attention will focus on how quickly President Buhari gets to grips with Nigeria’s economic challenges.                                               

The Nigerian bourse paused its rally last week as the NSE ASI declined 335bps, lowering ytd gains to 37.38%. %. The market opened the trading week to losses as investors continued to take profit on positions. However, gains on the bourse firmed with the ASI notching 166bps at the end of the week following strong interest on Tier I banks.                                         

With buying momentum strengthening at the end of last week, particularly on notable banking names, we foresee a positive start to trading this week.                                             

Stock Watch: After rallying to a five-year high of ₦193.00 at the beginning of the week, NB has lost 6% over the last four sessions to settle at ₦181.02 - still above consensus target price of ₦139.81.                                            

We expect the Fixed Income market to open this week tepid as pressured liquidity continues to constrain demand. However, we foresee improvement in sentiment towards week close, supported by the expected OMO maturity on Thursday.