Interim Dividend, Banking Stocks Attraction Spikes Rally, Ahead Of Q2 GDP Data Release

Market Update for August 2, 2018
Ahead of Q2 GDP report and political party’s primaries in the new month, the volatility recorded so far in the market will be heightened as bargain hunters take advantage of the oscillatory mode of the market going forward.
Nigeria’s equities market on Thursday had a volatile season to close positive and reverse the previous day’s down market on improved demand for interim dividend paying stocks especially in the banking sector, which also boosted the volume traded.
We note that implementation of the new structure of the Nigerian Stock Exchange (NSE) in recent times has so far not brought the expected impact from market makers in terms of liquidity to support relative stability as it remains on the downtrend. Worse still, unfolding events in the political space continues to fuel uncertainty and cast shadow on the overall mood of the equities market and the general economy amidst slowdown in foreign direct investment. While implementation of the recently introduced Pension Fund Administration (PFA) multi-fund structure offers a potential bright spot, we do not think the impact will significantly buoy year-end market performance, given the unease in the nation’s political space.
The trading session started out with a surge to the downside. A 5-wave decline that ensued in the previous session into the noon hour and afterwards to touch intraday highs of 36,708.03 basis points from lows of 36,510.88bps before closing the day at 36,688.91bps below the 20-Day Moving Average. Nevertheless, this may reverse today as traders cash out profits.
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Thursday’s market technicals were positive and mixed as volume traded improved in the midst of positive market breadth and sentiments as revealed by Investdata’s Daily Sentiment Report, showing a ‘buy’ position of 90% and ‘sell’ volume at 10%. Volume index was 0.78 of the day’s total transactions.
The momentum behind the day’s market performance was weak, regardless of the low liquidity, as reflected in the money flow index at 30.96points, decline from previous day’s 36.30points, indicating that funds are gradually again leaving the market.

Index and Market Cap
The benchmark index on Thursday gained 76.08 basis points, to close at 36,612.19bps, after opening at 36,612.19bps, representing a 0.21% growth, while market capitalisation was up by N128.52bn to close at N13.39tr from an opening value of N13.26tr, which represented 0.96% value gain due to the day’s listing of Notore Chemical Industries Plc at N62.50 which boosted market capitalisation for the day (READ MORE).
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The day’s upturn was attributed to interim dividend paying banking equities and high cap stocks like: Guaranty Trust Bank, UBA, Zenith Bank, Access Bank, Fidelity Bank, as well as Total Nigeria, Ecobank Transnational Incorporated, Stanbic IBTC, Honeywell and Wapic Insurance. This impacted positively on the NSE’s Year-to-Date return, negative position to 4.06%, just as market capitalization decline within the period dropped to N243.91bn, and 1.21% below the year’s opening value.

Bearish Sector Performance
Sectorial performance remained bearish as at close of Thursday’s trading session, except for the NSE Banking and Insurance sectors that closed green. Market breadth was positive as the number of advancers outnumbered decliners in the ratio of 23:16, to short-lived the previous down market.
Market activities were also mixed as volume was up by 33.4% to 320.45m, as against the previous day’s 240.21m, while value was down 29.14% to N3.53bn from the previous day’s N4.99bn.
Transactions for the day were boosted by trading in financial services, airline service provider and healthcare goods stocks, Nahco, UBA, FBNH, Union Diagnostic and Guaranty Trust Bank that witnessed increased trading to top the activity chart.
Portland Paints and Uacn Property were the best performing stocks for the day, topping the advancers’ table, after gaining 9.76% and 9.68% respectively, to close at N2.25 and N1.70 each as a result of market forces.
On the flip side, NSL Tech and Flour Mills were the worst, losing 10% and 5.40% respectively to close at N0.36 and N27.75 on market forces and profit taking

Market Outlook
Being the last trading session of the week, we expect a pullback of previous day performance due to profit taking, as investors continue to interpret and study the recent the Q2 earnings reports to rebalance their portfolios. Looking at the actual numbers released so far which will determine direction going forward, as more disappointing reports will drive the market further down, or inspire a reversal if numbers beat expectation. Also important, is the outcome of the shadow elections by political parties taking place in the month of August. Investors should review their positions in line with 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, especially during this season were Q2 interim dividend payment are expected in the market arena very soon.
We advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst improving company, economic and market fundamental.

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Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08032055467