Market Roundup for May

The month of May 2017 again defiled the popular saying that “sell in May and return in October,” which has in the past held true repeatedly as the Nigerian Stock Exchange (NSE) closed the month depressed in the month. This time around, the nation’s equity market galloped in May which ended on Wednesday with the NSE among the globe and Africa’s best performing markets.
The bull ascendancy was obvious in 21 trading sessions of the month when the market was up for 18 trading sessions and down in just three trading days to continue the third month of bull transition that turned the market from a loss position to a year-to-date gain of 9.76% attributed to several factors. These include the unprecedented number of listed companies that paid dividend for 2016, despite the economy being in recession with weak economic fundamentals that beat the expectations of the investing public.
Added to these was that corporate earnings for Q1 surpassed expectations, confirming data from the National Bureau of Statistics (NBS) and other data indicating that the economy is indeed recovering from recession, such as the inflation rate which declined in February, the first time in 15 months. That was also the month the Central Bank of Nigeria (CBN) reviewed its foreign exchange policy, leading to the ongoing intensive intervention under various sub-heads, including that meant to enable Small and Medium scale Enterprises (SME) import critical raw materials and machinery for productive activities. This, added to the provision for funding of invisibles such as Basic Travel Allowance/Personal Travel Allowance and medicals, as well as the usual wholesale auctions have enhanced forex liquidity, thereby bringing relative stability in exchange rate, leading to an appreciation in the value of the Naira against other global currencies.
Added to these is the relative peace in the Niger Delta that had supported the increase in daily crude oil production output expected to impact on the Federal Government’s revenue needed to fund the 2017 budget. Despite the fluctuation in the international price of crude, the good thing is that remains $7 to $8 above the $45 benchmark set in the 2017 budget now awaiting Presidential assent for implementation that kick start implementation of the government’s Economic Recovery Growth Plan (ERGP). If judiciously executed, it is expected that the plan would accelerate the recovery, after the economy has struggled for almost six months without 2017 budget.
Meanwhile, the composite index NSEASI for the month of May gained 3,739.80 points to close at 29,498.31 from an opening figure of 25,758.51, representing a 14.52% growth over the period on a strong accumulation move that impacted on stock prices to hit a new 52-week high within the period under review.
The buying volume of total transactions for the month was 94%, while selling position was 6% to continue the two previous month’s up market as volume index for the period was 1.30. Market capitalisation for the month gained N1.28tr to close higher at N10.2tr, from an opening value of N8.91tr, representing 14.52% appreciation in value, with market having a bullish sentiment for stocks as export and import exchange window stabilized with improving liquidity as the CBN matched the market’s supply side.
The month’s traded volume was up significantly by 127.81% to 8.93bn shares from 3.92bn in the month of April.
The All Share index’s year-to-date gain stood at 9.76%, just as market capitalisation for the same period adjusted up to N950.70 billion, representing 10.21% gain YTD from the opening value.
Market breadth for the month was strong and positive with widen number of advancers that outnumbered the decliners in the ratio of 77:15 to continue the bull-run.
The sectoral performance chart below shows that NSE Banking drove the market the most in the period under review. It gained 26.02%, which was more significant than that recorded by the benchmark NSE All Share Index; followed by the NSE Pension which rose by 20.89% to reflect the power of dividend paying stocks. This was followed by the NSE Premium index, which moved 19.63% up, to reveal investors interest in value stocks with strong upside potentials, amidst their low Price-To-Earnings attraction in the sector. Other sectors that closed up during the month were: NSE Consumer goods, NSE Main Board, NSE 30 Index, NSE Insurance and NSE Asem, while NSE Oil/Gas was the only sector in red by 2.97%.

The month’s best performing stocks were Fidson Healthcare, which rallied on the strength of market hearsay of acquisition of another pharmaceutical company, a situation expected to boost market share and bottom line, going forward. It closed the month better by a significant 107.27% of its opening price; followed by another healthcare company May & Baker, which appreciated by 75.29%; while FBN Holdings chalked all of 67.10%; and Oando, 46.19%.
Low, medium and high cap stocks among the top gainers for the month included: AXA Mansard Insurance with 43.31 % gain; UACN Property, 36.67 %; and Transcorp, 36.36%; among others.

Best Performing Stocks in May

The worst performing stocks’ table was led by Jaiz Bank, which lost 17.30%, linked substantially to its nature of banking that emphasizes profit sharing, rather than interest on loans charged by commercial banks. There was also the factor of its unimpressive Q1 2017 numbers released recently; Mobil Oil lost 4.26% during the month under review; the share price of Saplat Petroleum Development Company declined by 14.15%; Learn Africa, 9.76%; and Lafarge Africa, 5.73% on the back of profit taking.

Worst Performing Stocks in May 2017

OMORDION AMBROSE
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INVESTDATA CONSULTING LIMITED
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