Investors Digest Q2 Score-Cards, Review Portfolios, Watch Environment For Next Move

Market Update for August 1, 2018

As if to warn investors against thinking that the green days are here to stay for good, indicators of the Nigerian Stock Exchange (NSE) at the midweek turned red at the start of the new month of August, as traders booked profit from the rallies seen in the last few of July. During the session, smart money continued the selloff in high cap stocks with global interest rates looking up to make treasury yields attractive, thereby pilling more pressure on emerging markets like Nigeria, at a time of heightening political uncertainties ahead of the 2019 general elections.
Already, global central banks are adjusting rates in their bid to exit Quantitative Easing. Recently, for example, the Bank of Japan (BOJ) moved benchmark policy rate by 10 basis points to 10-year yield, while the German 10-year yield moved 10 basis points since Monday. In the U.S, yields have traded back above the important 3% level again. We suspect the 10-year yield will be in the mid-to-high 3s by the year end, which will continue to threaten capital flows into emerging and Fortier markets.

Portfolio Repositioning
Also, portfolio repositioning is expected to kick off as market players interprets and analyse the recent quarterly scorecards of companies to align with stocks that have high quality earnings with stronger future prospect of sustaining their performance till end of the year and beyond. Already, we have noted the fact that the half year earnings reports of many listed companies have remained mixed in performance and below market expectations, despite the fact that few companies posted surprising numbers.
The criteria for choosing quality companies with quality earnings were discussed at the July 28, 2018 workshop hosted by Investdata Consulting, which home study packs are ready. For your StudyPack, call or send YES to the phone numbers below.
Meanwhile, the midweek trading session started out with a little move to the upside in the morning, but had a sharp pullback by the mid-morning to afternoon as highly capitalized equities suffered losses before retracing up marginally to reduce the day’s losing momentum. This was however after the index had touched intraday lows of 36,573.19 basis points from highs of 37,023.18bps, before closing the day at 36,612.83bps. This pullback halted the four trading sessions of bull transition.
Market technicals for midweek were negative and mixed as volume traded was low in the midst of negative market breadth and sentiments as revealed by Investdata’s Daily Sentiment Report, showing a ‘sell’ pressure of 91% and ‘buy’ volume at 9%. Volume index was 0.83 of the day’s total transactions.
The force behind the day’s market performance flat despite the low liquidity, as reflected in the money flow index at 36.30 points, inching up from previous day’s 36.07points, indicating that funds are waiting for next move while investors digest the emerging corporate earnings.

Index and Market Cap
The NSE All Share index again broke down the 37,000bps psychological line, after trying to breakout the 20-Day Moving Average, shedding 404.95 basis points, to close at 36,612.19bps, after opening at 37,017.78bps, representing a 1.09% decline, while market capitalization lost N146.69bn to close at N13.26tr from an opening value of N13.41tr, also representing 1.09% value loss to wipe away the two trading sessions gain.
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Downturn on Wednesday, was as a result of selloff in medium and high cap stocks like: Nestle, Dangote Cement, Nigerian Breweries, Guaranty Trust Bank, UBA, CAP, Access Bank, Fidelity Bank, PZ Cussons, Dangote Sugar and Diamond Bank. This impacted negatively on the NSE’s Year-to-Date return, which worsened to 4.26%, just as market capitalization decline within the period dropped to N372.43bn, same as 2.16% below the year’s opening value.

Bearish Sector Performance
Sectorial performance at midweek were largely bearish, except for NSE Insurance and Oil/Gas that closed higher. Market breadth was negative as the number of decliners outweighed advancers in the ratio of 24:21, to halt the four days of up market.
Market activities were also mixed as volume was marginally down by 1.94% to 240.21m, as against the previous day’s 245.07m, while value was up 10.91% to N4.99bn from the previous day N4.49bn.
Transactions for the day were boosted by trading in financial services and consumer goods stocks, Zenith Bank, UBA, NB, Fidelity Bank and Sterling Bank that witnessed increased trading to top the activity chart.
Neimeth and Jaiz Bank were the best performing stocks for the day, topping the advancers’ table, after gaining 10% and 8.68% respectively, to close at N0.55 and N0.63 each due to market forces.
On the flip side, CAP and Royal Exchange Assurance were the worst, losing 10% each to close at N31.50 and N0.27 on profit taking and market forces.

Market Outlook
We expect mixed performance to continue as investors 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 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.

The management of Investdata Consultants Ltd wishes to appreciate all participants and facilitators that made it to the Investdata Midyear Comprehensive Stock Trading and Investing Workshop on Saturday, July 28, 2018.
The difference between you and others who are not aware of what I am sharing with you is ACTION. Take action that will transform your life for the rest of 2018 by getting the Just Concluded and life transforming seminar Comprehensive Stock Trading Toolbox for the Rest of 2018 Home study pack USB. Don’t sit on the Fence call 08028164085,08032055467 ,08111811223 now.

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