Market Roundup for May

Nigerian Stock Exchange rounded up the month of May on a highly negative note, extending to four straight months of back-to-back losses that wiped away the market’s year-to-date gains and turned into a loss position as negative sentiments propelled market-wide selling pressure. This kept the market in a downward trend throughout the period under review.
The popular traders’ mantra of “sell in May and return in October,” was obviously visible as profit booking, rate hike in the U.S made its yield on treasury investment attractive, hitting the highest in four years, with stronger dollar, amidst geo-political risk globally and back home that continued influencing the equity market negatively with investor confidence waving helplessly. The exit of smart money from emerging and frontier markets like Nigeria, as a result of the above factors raised the tempo for Nigeria as investors factored in the 2019 general elections, ahead of the healthier company report at full year 2017 and the 2018Q1. These are in addition to improvements in inflation and the positive GDP numbers, although less than desired, among other market and economic fundamentals pointing to economic recovery as revealed by the upbeat macro-economic indices released so far in the reports of National Bureau of Statistics (NBS) and Central Bank of Nigeria (CBN).
The bear dominance on the Nigerian equities’ market was obvious in 21 trading sessions of the month when the market was down for 16 trading sessions and up in just five as the benchmark All-Share index slipped into a loss position of 0.36% year-to-date. This represented a significant slide from a 17.49% gain recorded in January this year, which ranked it among the best performing stock market in the globe. The fall was quickened by the last 10 consecutive days of nose-dive in the month of May.
Factors blamed for the continued decline in the market despite all of the factors that ought to propel it in the opposite direction, include: the lack of general economic direction before the year’s first CBN Monetary Policy Committee (MPC) meeting in April, delay in approval of the 2018 budget, which was passed in the twilight of May and now awaits Presidential assent, as well as the dependence of the market on foreign inflows as driver, a situation that has again done more harm than good, even as both the government and regulators seem helpless and unwilling to raise the percentage of pension assets invested in the market
Even with the growing external reserve that was boosted by the rising oil price that traded at its three-year peak of $80 per barrel during the month, helped by continued relative peace in the nation’s Niger Delta to support the increase in daily crude oil production output that had impacted on the Federal Government’s revenue with which to fund the year’s budget, especially at a time the National Assembly has adjusted the budget size upward by additional N543bn. The federal lawmakers also adjusted the benchmark oil price in the budget to $51 to provide more funds to execute more infrastructure projects. If judiciously executed, the 2018 budget is expected to accelerate the recovery and boost economic activity that will usher in substantial growth.
It was apparently in view of this continued slide that members of the MPC, at its meeting that ended May 22, 2018, called specifically “for a careful calibration of policy so as to moderate the trend of capital outflows in an era of monetary policy normalization in the United States.” (READ MORE)
Meanwhile, the benchmark NSEASI for the month of May shed 3,164.02 points to close at 38,104.54 basis points, from 41,268.56bps, representing a 7.67% decline over the period on a strong downturn that impacted stock prices, forcing them to hit lower lows within the period under review.
The selling volume of total transactions for the month was 97%, while buying position was 3% to continue along the three previous month’s down market as volume index for the period was 0.90. Market capitalisation for the month lost N1.15tr to close lower at N13.8tr, from an opening value of N14.95tr, representing 7.69% value loss as investors’ portfolios continue bleeding, while the market remains under a bearish sentiment that seems not ready to go soon, just as smart money exits weakens liquidity level keeping demand for stocks low.
The month’s traded volume was down by 23.18% to 6.33bn shares from 8.24bn in the month of April.
The All Share index’s year-to-date loss stood at 0.36%, just as market capitalisation remained positive for the same period, adjusting lower to N193.14bn, representing 1.42% gain YTD from the opening value, representing the impact of new listings during the year.

Ambrose Omordion
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