Market Update for September 3
Thursday’s buying interest in banking stocks on the Nigerian Stock Exchange (NSE) sent the composite All-Share index higher on an increased traded volume to breakout the most recent strong resistance level of 25,469.93 basis points and 50% Fibonacci retracement line. This therefore extended the bullish run for the fifth consecutive session, following which traders at this stage of the market rally should tread cautiously. In this way, they would avoid the seeming bull trap, especially as the expected earnings from the banks continue to hit the market with numbers beating investors’ expectation to sustain the uptrend.
The wobbling economic fundamentals and inconsistent policies in a contracting economy that recorded a negative Q2 GDP of 6.1%, which has become a source of concern to many investors, especially at a time where all the expected interim dividend paying banks have released their scorecards. These numbers are expected to guide investors as they make decisions based on the actual numbers of these companies. This is just as the relative strength index in the short-term is at its overbought region reading 72.91 and money flow index is looking up at 80.80 point to indicate funds are entering the market.
Meanwhile, the half-year earnings report from Zenith Bank, Access Bank and Fidelity Bank were impressive, with Zenith and Access maintained their previous year interim dividend payout of 30 kobo and 25 kobo respectively. This is expected to support their share prices before the markdown date, depending on market forces and inflow into the equity space. These numbers from the banks show how strong and resilient the Nigerian banking sector truly is.
The top and bottom lines of Zenith Bank for the half-year rose by 4.83% and 16.81% respectively to N346.09bn and N103.83bn, translating to earnings per share of N3.30; just as Access Bank presented its half-year result after trading hours had closed which was also an impressive performance, with gross earnings rising marginally from N324. 38bn 2019, to N396.76bn.
Thursday’s trading opened on the upside, and was sustain for the rest of the session on position taking in medium and high cap stocks, which pushed the NSE index to an intraday high of 25,511.02bps, from its low of 25,460bps. Thereafter, close the day higher at N25,511.02bps on a positive breadth.
Market technicals for the day were positive and strong, with higher volume traded than the previous session in the midst of positive breadth and strong buying pressure, as revealed by Investdata’s Sentiment Report showing 100% ‘buy’ volume. Total transaction volume index stood at 1.07points, just as the impetus behind the day’s performance remained relatively strong, with Money Flow Index reading 80.80points, from the previous day’s 66.90points, an indication that the entry of funds into the market is slowing down, despite the up market.
Index and Market Caps
The NSEASI ended Thursday’s trading gaining 51.02bps, closing at 25,511.02bps, having opened at 25,460bps, representing 0.20% up, similarly, market capitalization rose by N26.62bn to close at N13.31tr, after opening at N13.28tr, also representing a 0.18% value gain.
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The upturn was as a result of value gain in MTNN, Guaranty Trust Bank, Zenith Bank, UBA, FCMB, Vitafoam, and Uacn property, which impacted positively on the index’s reducing Year-To-Date loss to 4.96%. Market capitalization YTD gain climbed to N405.12bn, representing 2.70% above the year’s opening value.
Bullish Sector Indices
The sectorial performance indexes were bullish, with the NSE Industrial goods and Oil/Gas closing flat, while the NSE Insurance led the advancers after gaining 0.50%, followed by Banking which was up 0.46%, and next was NSE Consumer Goods with 0.02%.
Market breadth remained positive as advancers outnumbered decliners in the ratio of 19:6, market transaction in term of volume and value were down by 28.18% and 17.86% respectively, as investors traded 232.42m shares worth N1.32bn, as against the previous day’s 181.32m units valued at N1.12bn. This was driven by trades in Transcorp, Zenith Bank, Lasaco, Access Bank and UBA.
UACN Property and Linkage Assurance were the best performing stocks for the day after gaining 8.3% and 7.7% respectively to close at N0.91 and N0.42 per share on market forces. On the flip side, Neimeth Pharm and Aiico Insurance lost 6.5% and 5.2% respectively, closing at N1.87 and N0.90 respectively on profit taking.
Market Outlook
We expect the current trend to continue on market reacts to the 30 kobo and 25kobo interim dividends from Zenith Bankand Access Bank, and looking forward to market correction ahead of markdown dates. Recall that the banks have kept the market above its 50-day moving average on a daily time frame.
The mixed intraday movement is likely to persist as the month of September progresses in the midst ofprofit booking and investors repositioning their portfolios ahead of Q3 numbers. This is also against the backdrop of the fact that the capital wave in the financial market may persist in the midst of relatively low-interest rates in the money market, high inflation, negative Q2 GDP of 6.1% and unstable economic outlook for 2020 as government and its economic managers are going front and back with mismatch polices and action.
Also, investors and traders are positioning amidst the changing sentiments in the hope of improved liquidity and positive economic indices which may reverse the current trend.
We see investors focusing on portfolio adjustment and rebalancing by targeting companies with strong potentials to grow their dividend on the strength of their earnings capacity.
Again, the current undervalue state of the market offers investors opportunities to position for the short, medium and long-term, which is why investors should target fundamentally sound, and dividend-paying stocks for possible capital appreciation for the rest of the year.
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INVESTDATA INVESTORS SUMMIT 2020: BEYOND THE UNCERTAIN TIMES
Theme- Life Beyond COVID: Investment Opportunities in Various Assets Classes
Sub-Topics
- Life Beyond the Pandemic: Personal Financial Planning, Investment and Trading Strategies in a Low Yield Environment (AlhajiGarbaKurfi, MD/CEO, APT Securities & Funds Ltd)
- How to Buy and Sell Stocks Profitably in Recession, Recovery and Boom (Mr Abdul-Rasheed Momoh, Head, Capital Market Trw Stockbrokers Ltd)
- Economic Recovery Scenarios, What’s the Fate of Equities and Other Assets Classes (MrOluwasegunAkinwale, Lead Analyst, Nova Merchant Bank)
- The Paradox of Declining Interest Rate and Rising Inflation: Confusion or New Realities for Investors (Mr. AbiolaRasaq, CSCS)
- The New Thinking in Fixed Income Market: Today and Tomorrow (Mr. KayodeTinuoye, Portfolio Manager, United Capital Asset Management)
- Outlook for Alternative Asset Classes: Where are the ETFs, Commodities, REITS and Real Estate Opportunities (MrTaiwo Yusuf Head, Wealth Management, Meristem)
- Portfolio Restructuring and Rebalancing for Positive Returns Ahead of Market Rebound (Engr. Mike Ekwueme X-Front Traders
- The Power of Earnings Quality, Value and Dividends in Equity Investment (Mr. Ambrose Omordion CRO Investdata Consulting Ltd)
The Summit will provide answers to these Seven question among others
- Where exactly are the opportunities in the equity market, fixed income and others?
- Which sectors or markets provide the post COVID-19 investment opportunities?
- How investors and traders can take advantage of the low interest regime to build profitable portfolios
- What are the prevailing market moves and who are the dominant players?
- What are Smart Money and Retail investors doing?
- Where should investors look to enter the market or exit?
- Is it the same every day, season and year?
Date: September 26, 2020
VENUE: ZOOM
For more details, call 08028164085, 08032055467, 08111811223 now.
Ambrose Omordion
CRO|Investdata Consulting Ltd
ambrose.o@investdataonline.com
Tel: 08028164085, 08032055467
