Equities’ Market: Where To Unlock Value In May, June


The global economic and market outlook remain unstable due to concerns over North Korea, at a time Japan and United States are holding military drills off that country’s coast. This is in addition to U.S’ position in global trade agreements that is now given conflicting signals, as oil prices continue to fluctuate in the international markets. All these factors have kept the level of uncertainty high. There are also the reduce political risk from France’s election, United Kingdom election still ahead, coupled with Brexit move and unstable fiscal and monetary policy around the world.
Back home, the seeming economic recovery will continue in the new month as we expect more of encouraging economic data and the eventual passage of the much awaited 2017 budget into law, thereby triggering the faithful implementation of ERGP that would hopefully complement the CBN’s effort at boosting productivity that will create employment and sustain recovery. Reasons for this are not far-fetched, given the relative peace and security that have since returned to the nation’s troubled Niger Delta region and stability in oil output, all of which would impact the nation’s revenue positively in the coming months.
In May, we expect inflation figure for April to be released by the National Bureau of Statistics (NBS) to drop further; just as Purchasing Managers Index (PMI) improves slightly to reflect the seeming recovery in Nigeria’s manufacturing sector and the GDP that would really confirm that the economy is on the path of recovery.
As the Q1 earnings reporting season officially comes to close with the month, company fundamentals have come out relatively stronger, leading to more positive numbers to kick start the 2017 financial year and provide a guide for the investing public to know where to look while seeking to build their tent.
Traders and investors who understand the importance of combining fundaments and technical analysis in making investment decisions in the stock market should take this opportunity to position in some sectors for medium to long term gains, especially the banking, Insurance, agribusiness and service sectors after carefully study of the recent numbers made available to the market.

What to expect in May and June
• Release of few quarterly and full year earnings. Earnings from blue-chip companies may strengthen market fundamentals, if positive.
• The oscillating trend of equity prices as a result of repositioning of portfolio along the line of positive numbers and profit taking.
• Market outlook for May is always dicey, in line with popular saying that traders always “sell in May and come back in October,” which necessarily depresses the market in May. In the Nigerian market, however, this theory has been defiled three time over the last five year when the market was up, contrary to the expected down market for the period. But with the better Q1 numbers than expected, 2017 budget likely to be approved by the national assemble this month, the CBN’s readiness to sustain it intervention in the FX market and the reserve still looking robust, there is a likelihood of improvement in liquidity, business activity ahead of second half of the year.
• Low valuation in the market may trigger high demand for stocks, but invest wisely, using bids, offers and volume when taking decisions as a trader.
• Managing risk and protecting capital at this point is very important, so you will be able to determine when to buy or sell, by watching the stocks and the market, using technical analysis.
• Let numbers released by the companies guide you decision and time to stay in that position.
• March year end companies full year earnings reports will start hitting the market in May till June.