NGSE: Dicey Outlook Yet For Aug, Sept, Amidst Anxiety Over 2019, Lagging Economy

The market and economic outlook for the months ahead remain unpredictable as the unstable global economic prospective continues to hamper investor confidence, as the lingering trade tension subsides due to new deals among countries and zones. The currency war between the U.S and China is another threat to global investment and trades horizon, especially on emerging markets and developed economics. The oscillating crude oil price now above $72 per barrel should impact government revenue positively, despite the recent decline of 1.23% in the nation’s external reserves. This is given the increased number of tax payers brought into the tax net by the Voluntary Assets and Income Declaration Scheme (VAIDS), which is expected to support government spending. Also, revenue in excess of the $51pb benchmark set for the 2018 budget should help to fund the budget deficit and reduce borrowing so that the spending plan will make the expected economic impact on the lives of Nigerians.

The relative peace and security in the nation’s Niger Delta region that has guaranteed stability of oil output has supported the upside in the nation’s revenue, economic health and wellbeing which if not sustained as the 2018 general elections draw closer may reverse the progress recorded so far.
But with the increasing insecurity, reversal of inflation rate on month to month and seeming positive economic data may change going forward depending on government policy and implementation of 2018 budget, especially Q2 GDP figure which INVESTDATA Research estimated could be lower than Q1 position, while Purchasing Managers Index (PMI) for the first month in Q3 should also give insight were the economy is heading to, weather we are static or moving slowly.
With the Q2 earnings season officially ending on Tuesday, company scorecards for half year have so far revealed the state of these companies to help investors ascertain the health and wellbeing of listed companies as they take investment decisions to hold or sell off. This is especially true as equity prices remain low and the general election draws closer on daily base.
Traders and investors who understand the operations of the stock market should take this opportunity to position in some sectors for medium to long term gains, especially in the services provider, industrial goods, banking, Insurance and consumer goods.
The actual Q2 numbers of the companies will help to project whether they are likely to post better Q3 earnings or not, which is the most important quarterly earnings reports, as it foreshadows how the full year could pan out, while at the same picturing economic activities as measured by the GDP.

August As Dicey month
August performance in the last four years have been negative on the exchange as revealed by INVESTDATA, research, making, it easier to look into the future, especially with uncertainties that surround pre-election periods, since political parties have this month to conduct their primaries to select candidates for various positions at in the general elections. It is very dicey at this point to predict up market now knowing that the factors against the market is higher than factor for the market now. There may be pockets of oscillation going into the month. Let investors keep their gaze on market trend and happenings for quick action.

What to expect in August and September
• Implementation of new pension funds new assets funding and classification
• Few quarterly and few full year earnings would be released. This earnings may not make much impact on market fundamentals, weather good or bad numbers.
• Few Interim dividend expectation, especially from the financial services stocks
• High market volatility as a result of portfolio rebalancing after digesting the numbers released so far. Also, the source of funds flowing into the market may cause fluctuations, giving that both local and foreign institutional investors trade thereon. There is the factor of the Federal Government crowding the private sector out of the financial market, with their offer of high and mouth-watery rates.
• Investors are expected to reshuffle their portfolios and invest in equities with strong fundamentals and prospects of growing their earnings going forward.
• A more vibrant market as a result of market players positioning for Q4, even as we expect liquidity to improve more.
• Market outlook for these months are dicey but invest wisely, using dates, bids, offers and volume when taking decisions.
• 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 tools.

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