Market Update for May 16
There was a seeming rebound on the Nigerian Stock Exchange on Thursday that halted eight consecutive sessions of losses, following the listing of 20.35bn ordinary shares of MTN Nigeria Communications Plc by way of introduction at N90.00 each (READ MORE). The listing rekindled buying interest among investors, as reflected on the volume traded for the day.
Following the listing, the market capitalization of the NSE soared by an unprecedented N1.9tr, or 10% to short-live the recent bear-run.
Nevertheless, investors should trade cautiously as weak market fundamentals in the form of dwindling confidence and the prevailing low liquidity remain unchanged.
We note that the small float of MTN Nigeria shares may support the share price in the short-term, given that 5.54m shares were traded on the first day, which is significantly low compared to the number of shares listed.
The relative stability in macroeconomic fundamentals, attractive low valuations, as well as the much awaited ministerial list and economic reform policy of the government as it prepares to begin its second four-year term.
Also on Thursday, the Senate confirmed the reappointment of Central Bank of Nigeria (CBN) governor, Godwin Emefiele, for a second five-year term beginning on June 2, 2019, ahead of next week’s last Monetary Policy Committee (MPC) meeting in his first term.
Trading for the day opened on the downside in the morning session and lingered to the early afternoon before retracing up in the late afternoon after touching intraday low of 28,019.97 basis points from a high of 28,452.00bps. The session, however, witnessed a turnaround, closing positive at 28,438.19bps on strong sentiments.
Market technicals were positive and mixed, as volume traded was higher than previous day’s, amidst a negative market breadth and strong buying pressure as revealed by Investdata’s daily sentiment report, showing a buy volume of 97% and sell positive of 3% of the total daily transaction volume index of 0.98.
The impetus behind the day’s market performance was very weak despite the upmarket as shown by the Money Flow Index of 8.74points, from previous day’s 8.62bps, indicating that funds had left the market and the rebound was not supported by inflow.

Index and Market Cap
At the end of trading on Thursday, the benchmark NSE All-Share index gained 152.11bps to close at 28,286.68bps, after opening at 28,286.68bps, representing a 0.54% growth, just as market capitalization was up by N1.9tr, closing at N12.53tr, from its opening value of N10.63tr, which also represented 17.87% value gain due to the listing of MTN Nigeria Communication Plc.
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The upturn was driven by the seeming buying interest in stocks like MTN, Unilever, UBN, Nahco, UCap, and Union Diagnostics, among others. This impacted positively on the Year-to-Date loss, as it reduced to 9.52%, just as market capitalization soared to N810bn, or 6.91%, from the year’s opening level of N11.72tr.

Sector Indices
All the sectoral performance indexes were down, with NSE banking leading the decliners after losing 1.71%, followed by the 0.97% slide in the Industrial goods, while Consumer Goods shed 0.83%. Market breadth remained negative as the number of decliners outnumbered advancers in the ratio of 25:11.
Market activities were down in volume and value by 76.73% and 35.38% respectively to 312.36m shares worth N2.81bn, compared to previous day’s 176.74m units value at N2.08bn. Volume was driven by financial services and conglomerates stocks like Transcorp Access Bank, FCMB, UBA, and Zenith Bank.
The best-performing stocks for the day were MTN Nigeria and NPF Microfinance that topped the advancer table, gaining 10% and 9.70% respectively, closing at N99.00 and N1.47 per share, on market sentiment for the newly listed company and dividend expectation. On the flip side, Unity Bank and Cuitx lost 9.72% and 8.33% respectively to close at N0.65 and N31.50, purely on market forces and profit-taking.

Market Outlook
We expect a slowdown and mixed performance to continue as value investing by discerning investors takes advantage of the low valuation to rebalance their portfolio ahead of the release by the National Bureau of Statistics (NBS) of the Q1 GDP data, alongside the MPC meeting holding on May 20 and 21.
More importantly, we expect that the government’s disbursement and implementation style in 2019 and beyond will change for good so as to drive the economy.
Investors look to government’s policy direction as the market faces low liquidity problems in the ongoing Q1 earnings reporting season, vis-à-vis market and economic fundamentals.
The drop in prices of major blue chips in recent times has created entry opportunities, following which we expect speculative trading to shape the market direction going forward.
The ongoing volatility will continue as investors and fund managers rebalance their portfolios, with eyes fixed on political space and ongoing quarterly earnings position and post-election market dynamics. Investors should review their positions in line with their investment goals, the strength of the company numbers and act as events unfold in the global and domestic environment.
However, we would like to reiterate our advice that investors should go for equities with intrinsic value.
We advise investors to allow numbers to guide their decisions while repositioning in any stock, especially now that stock prices remain low in the midst of mixed company numbers, weak economic and market fundamentals.

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Ambrose Omordion
CRO|Investdata Consulting Ltd
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