Post Views: 148 By Ambrose Omordion Market Update for June 21 The Nigeria stock market was down throughout the mid-week trading session as selling pre...
By Ambrose Omordion
Market Update for June 21
The Nigeria stock market was down throughout the mid-week trading session as selling pressure hit the market on massive profit taking and reaction to the Morgan Stanley Capital International (MSCI) Frontier Index’s to put Nigeria under consideration for a ”Standalone” re-classification until November. This part of seeing whether the Central Bank of Nigeria (CBN) can sustain funding of its recently introduced import and export Fx window as it has repeatedly assured. This delay can also be seen from the angle of the fact that the unstable price of oil at the international market may hinder the apex bank’s continued intervention, given that the commodity is Nigeria’s major source of revenue, a situation that could negatively impact its external reserve and subsequently liquidity level in the foreign exchange market.
So far, the Central Bank of Nigeria (CBN) has in the last five months demonstrated its commitment and readiness to meet the supply side of the forex market, seeing the impact on economic recovery so far.
It must however be noted that factors which helped Nigeria’s stock market to this level of being a leader in African, gauged by return on investment are still very much in intact- strong company and economic fundamentals, as well as the hope that implementation of the 2017 budget, leading to more liquidity. Wednesday’s drop in Nigeria’s stock market indicators, just as INVESTDATA has repeatedly warned, must therefore be viewed against the fact that profit taking is an integral part of any stock market, meaning that if you are in good stocks before this pullback don’t panic and if you are in cash, HOLD to watch the next trend especially as the Q2 earnings is around the corner. Investors must also note that a slide in prices of stocks also offers new investors opportunity to take position in them, hence it is normal and should be expected.
Investors and analysts expect the implementation of the 2017 budget to positively impact the economy, with government borrowing to fund infrastructure development and further boost economic fundamentals and support businesses. The $300m bond that was oversubscribed and the recent World Bank approval of $961m are expected to also support the Federal Government in the implementation of its Economic Recovery and Growth Plan (ERGP), if faithfully utilized.
Meanwhile, the composite index, on Wednesday, NSEASI shed 897.71 basis points to close at 33,477.89 after opening at 34,370.60 points, representing a 2.61% decline on huge volume traded that was higher, when compared to previous day’s transaction level. Volume index was 0.96 with a buying position of 8%, while selling volume was 92% of the total transactions for the day. Market capitalisation for the day was down N311.06bn to close at N11.58tr from an opening value of N11.89tr, representing 2.61% depreciation in investors’ portfolio.
The downturn recorded for the day was impacted by losses suffered by highly capitalized stocks to reduce All-Share index’s year-to-date return to 25.30%. Also, market capitalisation for the same period stood at N2.33tr, representing a 25.94% appreciation above the year’s opening value.
Market breadth for the day was negative as the number of decliners outweighed advancers in the ratio of 37:13 on huge volume of trade to halt the five straight days of bull-run.
Market activities in terms of volume and value were up by 29.70% and 51.09% respectively to 508.73m shares from previous day’s 392.27m, and N6.40 from previous day value of N4.22bn. Transactions in the shares of ZENITH BANK, FIDELITY BANK, GUARANTY TRUST BANK, DIAMOND BANK and UBA topped the volume chart to close the day’s trade.
At the end of trading, Neimeth topped the advancers’ log with its share price gaining 9.09% to close at N0.84 each on impact of government new policy on healthcare, just as its Q3 numbers are expected in the market, added to the factor of its low price attraction. It was followed by Conoil Oil 4.99% gain to close at N40.42per share, as investors reacted to the release of its 2016 full-year financials and the offer of N3.10 dividend per share from Earnings Per Share of N4.09.
On the flipside, PZ and Skye Bank led the decliners’ log, dropping 5.00% apiece to close at N20.90 and N0.76 respectively on profit taking, while Cadbury followed with 4.98% to close at N13.54 each on profit taking.
As the market opens this morning, expect mixed action of profit taking and MSCI decision to on Nigeria, as repositioning in value stocks continue. Investors should not panic on pullbacks if they have taken position based on strong numbers and future prospects of any stock.
Again, we advise that investors allow numbers to guide their decisions to reposition for the rest of the year’s trading activities, especially now that prices of stocks are looking up ahead of recovery economic fundamentals, if the numbers will support the price reversal or continuation.
It is time to use your technical tools to take decision by knowing the support and resistant level to reposition or exit any position.
Once more, at the risk of repeating oneself, we must reiterate that industry potential is very important when picking a stock, because there are factors that are sector-specific and would naturally impact positively or negatively on companies operating within such an industry, especially now that the economy is recovering. For stocks that should be on your shopping list to buy in this up market or pullback sign up for investdata buy & sell signal setup by calling 08032055467.
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Workshop on COMPREHENSIVE SHORT-TERM TRADING STRATGIES FOR REST OF THE YEAR & BEYOND
1. The Toolbox of Successful Traders & Technical Analysts- Mr Meshach Ukpoma, FX Analyst/Trader
2. Outlook and Implications of the 2017 Budget & Petroleum Industry Governance Bill (PIGB) on Nigeria’s Stock Market and Economy- Abiola Rasaq, Group Head Investor Relations, UBA
3. A Strategic Outlook; The Fusion of Fundamental & Technical Analysis- Ambrose Omordion, Chief Research Officer Investdata Consulting Ltd
4. Understanding Market Timing to Manage Risk, Using Technical Analysis – Mr. Abdul-Rasheed Momoh, Head, Capital Markets, TRW Stockbrokers Limited
The workshop holds on:
DATE: 15 July 2017
VENUE: Ostra Hall & Hotel, Behind MKO Abiola Gardens, Opposite NNPC Gas Plant, CBD, Alausa, Ikeja. Lagos.
The fee is N20, 000 per participant. Payment made a week before the date of the event attracts 10% discount. Companies sending more than two representatives would enjoy a 15% discount. Payment should be made into: Zenith Bank; Account Name: InvestData Consulting Limited; Account Number: 1013033032.
For more enquiries about the programme, please call 08032055467, 08179547605, and 08111811223
MR. OMORDION AMBROSE
CHIEF RESEARCH OFFICER
INVESTDATA CONSULTING LIMITED
TEL: 08179547605, 08032055467