Market Update for March 14

(By Ambrose Omordion) The Nigerian stock market Tuesday rebounded to close higher on the back of continued mixed sentiments and the lower February inflation figure (for the first time in 15 months) as revealed by the data released by National Bureau of Statistics (NBS) in the early hours of the day’s trading session.
This was in addition to the impressive earnings report from Continental Reinsurance (https://investdata.com.ng/2017/03/forex-gain-lifts-continental-res-profit-135-6-offers-14-kobo-dividend/), which became first in its sub-sector to release numbers early this season. Most players in that industry have been known over the year to publish their earnings report between April/May, a situation that is seen in the number of operators seeking to delay their filings this year too, because such must first be approved by the National Insurance Commission (NAICOM), being the industry’s primary regulator. It is as if their cousins- the banks do not get their own results approved by the Central Bank of Nigeria (CBN). Yet, banks have kept faith with the NSE’s post-listing requirement as some of the first early birds. It would not be out of place to still find that some insurers are still holding on to their 2015 financials!
Despite the mixed reaction to earnings and dividend payout so far in the market this earnings season, we have put out our forecast and prediction about stocks that will grow or cut dividend and those companies that will not pay at all. The numbers released so far have been in that direction to confirm our projection in the INVESTDATA traders & investors’ summit held on December 3, 2016.
But, the proposed interest rate hike in US may put pressure on emerging markets as funds outflow to developed markets, especially banking stocks in the U.S as breakout is imminent. The recent drop in crude oil price may also threaten global and local energy/oil stocks. Let me just reiterate my earlier stance that I do not see any major near-term recovery in the Nigerian stock market.
Instead, I see this up and down movement continuing till the end of current earnings season and over the next month.
When you look at the relatively high volatility in the market today, along with the mixed sentiments, it is hard to see how we can even expect a strong retracement. Clearly, it is not likely that the “rally” which most have been anticipating for quite some time will be seen anytime soon. You see, markets do not strongly recover when most expect it.
Rather, they bottom when most are bearish, and top when most are bullish. A sentiment reading that is as bearish as when the market bottomed in April of 2016 is not an indication of a market bottom in the current situation, in my humble view.
Meanwhile, the composite NSE All-Share Index gained 147.93 points to close at 25,284.56 points, after opening from 25,136.63 points, representing 0.59% growth on above trading volume. This was attributed to modest improvement in investor optimism as inflation rate witnessed a slowdown for the last time in 15 months. Similarly, market capitalisation for the day was up by N51.20 billion to close higher at N8.75 trillion, from an opening value of N8.73 trillion, representing 0.59% value appreciation, as the market mood remain mixed.
Appreciation in the prices of medium and high cap stocks have reduced the All-Share index’s year-to-date negative position to 5.90%, just as that of the capitalisation for the period adjusted to N496.41 billion, representing 5.30% loss from the opening value.
Today market breadth was positive and strong as the number of advancer’s outpaced decliners in the ratio of 21:12 to halt the previous day’s down market.
Transaction volume and value were up by 68.21% and 36.22% respectively to 227.76 million of shares from 135.40million in the previous day and N923.50 million from Monday’s N681.63 million.
Transactions in financial services stocks like Diamond Bank, FBNH, Zenith Bank, and NEM dominated the activity chart as most traded equities by volume.
The NSE All-Share index and all sectoral indices were mixed to close the day’s trading.
During the session, Aiico, Pharm-Deko, UACN and Eterna Oil notified the exchange of their directors’ meeting to discuss the 2016 financial report and dividend. Also, IEI informed the exchange of a possible delay in it 2016 account
Seplat led the advancers table, chalking 5.00%; followed by Access Bank with 4.20%; while Lafarge Africa led the decliners table, next was ETI with 4.48% to close at N0.64
Access Bank’s share price was adjusted for its proposed 40 kobo final dividend as recommended by the directors.
Again hold your position in value stocks likely to pay dividend and those that have recommended dividend already, but whose prices are falling due to the prevailing mood of the market. Watch out for support levels to reposition as the recently adjusted share prices for dividend are rebounding.