NGSE Index Bleeds On, As Political Uncertainties Becloud Attractiveness

Market Update for July 11, 2018

Political uncertainties and economic slowdown continue to dominate and even becloud the Nigerian market’s narrative, as it again closed negative at the midweek despite improving volume of trades which was below the recent market traded average. The impact of 2019 elections and ongoing security challenges as envisage by many market players hit the market earlier than expected as the down trend continued on relatively low volume, especially as unfolding events regarding weekend’s Ekiti State governorship election confirm the fears among investors and analyst. For many, happenings around the July 14, 2018 election continue to feed the polity with unnecessary wrong signals that none of the regulators or government is doing much to play down, ahead of general election in 2019.

The currency and fixed income market had journeyed along the path of global market events since the beginning of the year, with depreciatory pressures on FX building and yields on Treasury instruments declining, particularly at the short end of the curve. Looking ahead, we believe the CBN will have the willingness and the ability to hold the NAFEX rate at its current levels, despite fundamental and valuation depreciatory pressures that had been impacted the stock market somehow, in the form of smart money continuing along its flight for safety in predictable high yield environment.

At the end of Wednesday trading session 100 million of Access Bank shares were transacted by foreign investors at N10.40, which was below its opening after touching intraday low of N10.00.

NSE index during the day had a volatile wave from the opening of the session in the morning till midday after touching intraday floor of 37,233.82 basis points, from its high of 37,431.58bps, before retracing up marginally in the afternoon to close at 37,253.25bps on a continue selloffs in medium and high stocks.

Market technicals at the midweek were negative and mixed with high traded volume in the midst of negative market breadth and sentiments, as revealed by Investdata’s Daily Sentiment Report showing a ‘sell’ pressure of 90%, while ‘buy’ position for the day was 10% on a volume index of 0.85 of the day’s total transactions.

The energy behind the market performance for the day remained weak as reflected on the money flow index at 34.24 points, up from the previous day’s 34.29 points, an indication that funds are still in the market, even if very low, due to cautious trading as traders and investors maintain their wait-and-see attitude.

Index and Market Cap

The All Share Index at the close of the session shed 169.59 basis points, at 37,253.25bps, after opening at 37,422.84bps, representing a 0.45% decline, just as market capitalization, down by N60.77bn as it closed at N13.5tr, from an opening value of N13.56tr, also representing 0.45% value loss to further deepen investors’ negative position.

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The day’s downturn was impacted by value loss recorded in market heavyweights like Dangote Cement, Guaranty Trust Bank, Julius Berger, Lafarge Africa, Access Bank, UBA, Flourmills, and FCMB These impacted negatively on the NSE’s Year-to-Date return. This deepened the NSE loss position to 2.59%, while market capitalisation loss stood at N114.46bn, same as 0.84% below the year’s opening value.

Bearish Sector Performance

Sectorial performance for the day were bearish except for NSE Oil/Gas and Banking that closed higher, while other indexes closed downward in the same direction as the general market.

Market breadth was negative as decliners outnumbered advancers in the ratio of 25:17 to continue the two-day down market.

Market activities were mixed as volume was up by 34.65% with 287.09m shares changing hands, as against Tuesday’s volume of 213.2m units, while value was slightly down at N3.75bn, from the previous day’s N3.76bn. Volume was boosted by trading in financial services and conglomerates stocks like Access Bank, Zenith Bank, Transcorp, Guaranty Trust Bank and FBNH that witnessed increased trading to top the activity chart.

Custodian Investment Plc and Micnichols were the best performing stocks, as they topped the advancers’ table after chalking 10% and 9.88% respectively to close at N6.27 and N0.89 each, due to their low-price attraction and expectation of interim of dividend.

On the flip side, Julius Berger and Thomas Wyatt were the worst performing, losing 10% and 8.82% respectively to close at N27.00 and N0.31 on profit taking and market forces.

Market Outlook

We expect a slowdown in the decline that leads to reversal soon as Q2 earnings season kicks off any moment from now, since equities remain undervalued with higher yields. Investors should review their position in line with their investment goals and act as events unfolds 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 fundamentals.

The Date: Investdata Stock Market Training Workshop

On Saturday, July 28, 2018

Theme: Comprehensive Stock Trading & Investing Toolkit for Rest of 2018

Sub Topics

Review of 2018H1 Market & Economic Performance:  How Fiscal Reforms and Stimulus Will Support the Market/Economy in 2018H2.

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2018H2 Trading Checklist: How to Find Winning Stocks in Nigeria’s Volatile Equity Market

After the prolonged correction, volatility is here to stay for the rest of 2018. Is it time to start worrying about losses suffered so far, a flattening yield curve or time to relax due to the outstanding earnings season? Better yet, is there a way to harness increased volatility to your advantage? Our facilitator, a stock market expert will show you how to handle increased volatility in 2018. He’ll offer insights into forces impacting today’s market. He will share, using real-time examples, his ultimate checklist to finding winning stocks propelled by volatility. This simple strategy allows you to quickly evaluate stocks and to better time entry and exit points, while understanding market forces moving your portfolio

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Kindly call or send yes to 08032055467, 08028164086 or 08111811223.

Ambrose Omordion

CRO|Investdata Consulting Ltd





Tel: 08028164085, 08032055467

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