NGSE Indicators Remain Under Shadows Of Covid-19, Amidst Uncertainties, As Lockdown Persists

Market Update for the Week Ended April 3 and Outlook for Apr 6-10
The composite index of Nigerian Stock Exchange (NSE) continued its decline for the fourth consecutive week on low traded volume, being the possible effects of the ongoing remote trading, following the restriction of movement declared by the Federal Government in two states, including Lagos, and the Federal Capital Abuja. The negative sentiments induced across the globe by the Coronavirus pandemic has led to shut down of factors the world over, and the crash in crude oil prices , owing to weak demands, with oil price touching an 18-year low of $16.77 per barrel.
Panic selling continued as discussions about the deadly disease dominated the global stage, despite Nigeria’s seemingly impressive score-card of 210 total number of Covid-19 cases, including four deaths and 25 discharged. Across the globe, there are over a million cases already.
With the first quarter of 2020 over and the earnings season beckons, many quoted companies have notified the NSE and investors of their closed period, Investdata believes that the numbers therefrom may not be fantastic. This is given the fact that all available macro-economic indices within the first quarter of 2020 are looking down and disappointing, confirming the slowdown in the economy within the period. The outlook for recovery will depend more on the infection’s curve and how cooperative Nigerians are with measures put in place by the government, than the impact of the economic stimulus put in place by the fiscal and monetary authorities.
However, the actual position of Q1 numbers will help to douse tension among investors and remove the air of uncertainty over how much the lockdown has impacted corporate scorecards. It is noteworthy that the stimulus packages will not significantly impact the economy since factors and businesses are on lockdown. They will, therefore, not stimulate growth as expected.
The government should, therefore, prepare for full blow economic challenges, particularly increased unemployment, rising inflation, and low purchasing power, after the lockdown.

Movement Of NSEASI
It was a negative week of mixed trading and selloffs, marked by the buying interests in financial service stocks and highly capitalized equities. The week opened on a negative note, with the NSE All-Share index shedding 2.43% on Monday, a trend that was sustained till midweek during which the index lost shed 0.05% and 0.94% respectively on Tuesday and Wednesday.
The index rebounded marginally thereafter on Thursday, gaining a marginal 0.10%, before pulling back again on Friday by 0.13%, amidst mixed sentiments as the week’s loss increased to 3.51%, which was more than double previous week’s 1.52% decline.
In all, the NSEASI shed 767.16 basis points, after opening at 21,861.78bps, touching an intra-week low of 20,769.37bps and high of 21,828.65bps on mixed sentiments, low traded volume on the uncertainties due to lockdown. The index closed the week at 21,094.62ps, after breaking down the 21,000 psychological line to test 20,769.37 points, just as market capitalization fell by N400bn. It, therefore, closed at N10.99tr, from the N11.39tr it opened, representing a 3.51% decline.
During the week, the share price of Custodian Investment was adjusted for dividends, just as the rights issue of Consolidated Hallmark Insurance was extended to May 1, 2020, from April 1, 2020.
During the week, the second, of full trading from remote platforms, 12 companies released their full-year 2019 earnings reports, with five of them, recommending cash and scrip dividends, irrespective of the 60-day extension of the deadline for submission of the 2019 audited financials.
Despite the seeming mixed sentiment, low cap stocks again dominated the week’s advancers table, amidst buying interests in healthcare stocks and others that had recently suffered huge losses. This reflected in the market breadth as decliner’s outnumbered advancers in the ratio of 36:15, just as the energy behind the week’s performance was weak, with Money Flow Index sliding to 31.43bps from 32.34bps recorded in the previous week.
Activities in terms of volume were low, although marginally higher than that of the previous week, as many traders were locked out of the NSE’s platform, due to the resort to full remote trading, besides the wait-and-see attitude of market players.
Meanwhile, discerning investors have continued to take advantage of the low prices in the midst of panic selling and confusion, to reposition their portfolios for the medium to long-term, as earnings reporting season for Q1 has also been extended to May.
The mixed sentiment during the period was confirmed by Investdata’s Sentiment Report for the week, showing 31% ‘buy’ volume, and 69% ‘sell’ position, on a transaction volume index of 1.03.

Bearish Sectoral Indices
Sectoral indexes for the week were bearish, except for the NSE Oil/Gas index which gained 2.33%, while the NSE Banking led the decliners after losing 5.30%, followed by the NSE Consumer Goods, Industrial Goods and Insurance, which lost 3.90%, 1.22%, and 0.27% respectively.
Market transactions in terms of volume and value for the week, were mixed as volume traded rose by 5.52% to 1.53bn shares from the previous week 1.45bn units, while value fell by 24.46% to N11.27bn, from previous week’s N14.92bn. The week volume was boosted by trades in financial services stocks, especially Sterling Bank, Zenith Bank and Meyer.
GSK and Livestock Feeds were the best-performing stocks for the week, after topping the advancers chart, gaining 24.68% and 18.64% respectively, at N4.80 and N0.70 per share on low price attraction, the Central Bank of Nigeria’s stimulus packages and market forces. On the flip side, Nigerian Breweries and Ecobank Transnational Incorporated lost 13.72% and 12.36% respectively, closing at N22.00 and N3.90 per share on panic selloffs.

Market Outlook
We expect the mixed performance to continue depending on developments around the COVID-19 pandemic in the new week, as the government implements measures to contain the spread while addressing the adverse effects on the economy. Already, we note that the manufacturing sector, among others in the economy, are already depressed by happening in the economy and the world at large.
Also, do not forget to identify and play defensive stocks among the many fundamentally sound companies that remained depressed, making them attractive for bargain hunting by market players. This has also resulted in significant improvements in Dividend Yields of stocks, even as we note the fact that fund managers who held cash before now, may have to rethink the strategy and go for value stocks with high upside potentials.
This is just as more liquidity flow to high Dividend Yield stocks with sound fundamentals, a situation that will also be based on the seemingly positive outlook for the domestic economy, despite the mixed outlook for 2020 from various analysts.
While discerning investors should take advantage of the current low stocks valuation to position for the medium to long-term, it is noteworthy that the Nigerian equity market is selling at a discount and therefore offers high upside potential.
of a bargain-hunting motive supporting positive performance, especially with many fundamentally sound stocks remaining underpriced. With a dividend yield of major blue-chips continuing to look attractive in recent weeks, we expect speculative trading to shape the market’s direction, despite the seeming mixed outlook.
to position for the short to long-term, which is why investors should target fundamentally sound and dividend-paying stocks for possible capital appreciation in the New Year. This was noted in the 10 golden stocks and trading ideas for 2020, as discussed extensively during the Investdata 2020 Opportunities & Trade Ideas Summit.
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Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08032055467