Market Update for the week ended February 15 and Outlook for February 18-22
Trading on the Nigerian Stock Exchange in the past week experienced a bullish transition, defying the heightened political tension as resulting in high demand for blue chip and dividend paying stocks, while the gaining momentum increased, closing higher on a huge traded volume.
As reported some days ago, last week was a very busy one on the NSE, as the National Bureau of Statistics (NBS) reported Nigeria’s 2018 full year GDP figure at 1.93%, boosted by the non-oil sector, and January inflation rate of 11.37% (READ); while Consumer Price Index for January rose at a slower pace by 11.44% (READ MORE). These seemingly improved economic indices, just as expected corporate earnings are likely to influence equity prices during this election season and after.
Already, the earnings reporting season kicked off in the week under consideration with audited reports from Newrest ASL, Transnational corporate of Nigeria and Transcorp Hotel, whose directors recommended dividend of 15 kobo, 20 kobo and 0.03 kobo respectively.
Nigerian Breweries, a leader in the nation’s alcoholic beverages industry, also made available its 2018 full year earnings report after the close of trading, cutting dividend per share from 313 kobo in 2017 to 183 kobo, reflecting the continued low consumer confidence among Nigerians.
Stocks closed higher in developed markets as crude oil inched near its three-month highs, looking like running back to the $70s per barrel, especially against the backdrop of the fact that the U.S/China deal is a catalyst for a lift-off in commodity prices, including oil. With the Fed now in a ‘wait and see’ position, we have had the most important interest rate market in the world when the U.S. 10-year yield hits 3.25% before sliding to 2.66%. With inflation tame and economic data solid, the interest rate market has gone from a headwind to a tailwind (for global risk taking) within just the past six weeks.

The chart above represents the Emerging Market stocks movement, and remains one of the most compelling chart to study. We have a big technical breakout this year, though the EM index has been relatively quiet this week, despite a very strong U.S. stock market. This may be the chart to watch next week.
Back home, the Nigerian stock market was bullish for the week, despite profit taking that caused the midweek pullback. The uptrend was sustained due to increased buying interests ahead of earnings season. The All Share index started the week on a positive note with a gain of 0.80%, rallying further on Tuesday with a gain of 2.14%, the most audacious daily gain so far this year. There was however a pullback on Wednesday when it lost 0.15% on profit taking before rebounding on Thursday with 0.12%, continuing the following day at 0.81%, bringing cumulative rise for the week to 3.76%, consolidating previous week’s gain of 2.92%.
Low cap stocks dominated the advancers chart as bargain hunting increased, despite the election tension and profit booking. Impetus behind the week’s performance was up, as reflected in the money flow index of 46.77 basis points, as against 36.51bps in previous week. This is an indication that funds entered the market as volume traded continued to look up with more stocks recording gains.

Equity Indicators Last Week
Benchmark NSEASI for the week gained 1185.28 basis points to close at 31,529.92bps, after opening at 31,529.92bps, touching intraweek highs of 32,958.96bps from the low of 31,515.44bps. This was on huge traded volume that reflected positive sentiment in the midst of up market breadth and high buying pressure as revealed by Investdata weekly sentiment report showing 83% buy position and 17% sell volume, while the period transaction volume index of 2.13%. Similarly, market capitalization was up by N442.01bn, closing at N12.2tr, up from N11.76tr, representing 3.76% value gain that impacted positively on the NSEASI’s year-to-date 4.09%. Market capitalization turned positive, rising to N505.26bn, compared to the year’s opening value of N11.72tr which represented 4.09% growth.

NSEASI Weekly Time Frame

The composite index recently formed a multiple Tops that support pullback after rebounding to test the first resistance level three times as show by the yellow line ABC. The market on daily and weekly time frame as MACD has crossed the signal line, as the index closed above it 20-day moving average on a high volume and money flow index looking up.

Bullish Sectors Indices
The sectorial performance indices for the week were all bullish to closed higher, with NSE Oil/Gas index leading with 6%, driven by increased buying interest in Oando, Seplat, Eterna and Total Nigeria among others; followed by Consumer goods index that was up by 5.4% by the help of Nestle, Dangote Sugar, Dangote Flour, Nascon NB and other. The NSE banking index followed with 1.6% on strength of UBA, Stanbic IBTC, UBN, ETI and Access Bank, among others.
Market breadth for the week remained positive, with advancers ’outnumbering decliners in the ratio of 56:13, to continue the previous week’s up market.
Market activities were up in volume and value by 49.74% and 4.69% respectively at 2.83bn shares worth N28.14bn, up from previous week’s 1.89bn units valued at N26.88bn.
Wema Bank and Livestock Feeds were the best performing stocks for week, topping the advancers’ table with 45.07% and 44% gains respectively to close at N1.03 and N0.72 per share on low price attraction and market trend for the week. On the other hand, C& I Leasing and Medview Airline lost 18.92% and 8.11% respectively, closing at N7.33 and N1.70 on market forces and profit taking.

Market Outlook
We believe the market will slow down due to the postponement of Saturday, February 16 Presidential and National Assembly election on the voting day by the umpire, the Independent National Eletoral Commission (INEC), which is likely to trigger some form of confidence crises, besides raising trust issues. Profit taking and volatility from early rally witnessed in the previous week which driven by traders and investors repositioning ahead of dividend declaration by major listed companies.
This move by government in less than three weeks to presidential polls will further rattle investor’s confidence in the market and the system entirely. The elections were postponed by a week respectively, barely five hours to its takeoff. The possibility of slowdown in position taking on blue-chips stocks for short term gains has increased; however, gains recorded in the two previous weeks are not sustainable in the near term owing to the elevated risk in the domestic and external market.
The ongoing volatility will persist as investors and fund managers reposition their portfolios, with eyes fixed on political space and ahead of full year company earnings position and post-election market dynamics. These are likely to drive prices north, or south, while determining market direction before or after the Presidential Election.
Investors should review their positions in line with their investment goals, 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 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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