Market Update for March 12
The benchmark All-Share index of the Nigerian Stock Exchange (NSE) sank further on Thursday as selloffs persisted with the World Health Organization declaring the ravaging coronavirus a global pandemic.
The impact of the virus seems heavy, killing more stock markets and economy than people across the globe, sending panic waves around the world, more devastating than the financial meltdown of 2008.
Nigerian stocks hit new lows as the NSE’s benchmark index hit a new 11-year low on a huge traded volume that suggests that investors are dumping their shares, in their frenzied bid to cut their losses. So far, the Nigerian market has lost all of 13% in just four trading sessions of the week, just as over N1.82tr has been shaved off the market capitalization within the same period.
Meanwhile, with the resultant drop in the price of crude oil at the international market, the Nigerian economy is already challenged as the implementation of the 2020 budget under serious threat.
The Central Bank of Nigeria (CBN), on Thursday night, moved to douse tension over rumours and fear of a possible Naira devaluation arising from the oil price slump, a situation that triggered the demand for the US Dollar. This ensuing fear weakened the exchange rate of the Naira against major global currencies (READ MORE).
Without any doubt, the Nigerian economy is challenged from all sides, hence the renewed investor option on listed equities. Despite CBN’s efforts to drive economic growth and development through the low-interest rate regime, a situation that is first in the history of Nigeria, even as the lack of investor protection and corporate governance are hurting the market.
Meanwhile, Thursday’s trading opened on the downside and was sustained throughout the day on heavy selloffs that pushed the NSE’s composite index fell below the 23,000 psychological level to an intraday low of 22,694.32 basis points, from its high of 23,500.46bps. It thereafter rose slightly to close lower at 22,695.88bps.
Thursday’s market technicals were negative and weak with volume traded lower than that of the previous sessions in the midst of breadth favoring the bears on high selling pressure sentiments as revealed by Investdata’s Sentiment Report showing 100% ‘sell’ volume. The total transaction volume index stood at 2.88 points, just as the momentum behind the day’s performance remains weak, with Money Flow Index slipping to 17.33 points, from the previous day’s 18.72points, an indication that funds left the market, as selloffs continued in the midst of prevailing low liquidity.

Index and Market Caps
The NSEASI at the end of Thursday’s trading shed 876.87bps, closing at 22,695.88bps, from an opening figure of 23,573.75bps which represented a 3.72% drop, just as market capitalization lost N456.96bn, closing at N11.83tr, from the N12.28tr opening value, which also represented 3.72% value loss.
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Thursday’s decline was impacted by continued selloffs in medium and high cap stocks like MTNN, Guaranty Trust Bank, Zenith Bank, Access Bank, FBNH, NASCON Allied, ETI, Conoil, NB, Dangote Sugar, Lafarge Africa, Fidelity Bank and Wapic Insurance. This expectedly impacted negatively on the NSE, as its Year-To-Date loss increased to 15.45%, while market capitalization YTD negative position stood at N1.13 trillion, representing an 8.73% decline over the year’s opening value.

Bearish Sector Indices
The sectorial performance indexes were all down, as NSE Banking led the decliners, after losing 8.51%, followed by the NSE Insurance with a 5.22% decline, just as NSE Consumer, Industrial goods and Oil/Gas followed with 2.94% 0.93% and 0.82% respectively.
Market breadth remained negative as decliners outnumbered advancers in the ratio of 44:4, while market transactions in terms of volume and value traded were down by 23.94% and 44.4% as investors traded 1.06 billion shares worth N9.81 billion from the previous day 1.39 billion units valued at N17.65 billion. Volume was boosted by trades in Zenith Bank, UBA, Guaranty Trust Bank, FBNH and Wapic Insurance.
Caverton and Sky Aviation were the best-performing stocks that topped the advancers table with a gain of 10% and 9.93% respectively, closing at N2.10and N2.57 per share on dividend expectation and market forces. On the flip side, Africa Prudential and Fidelity Bank lost 10% each, closing at N3.60 and N1.53 respectively on sell down.

Market Outlook
We expect a slowdown on the losing momentum as low prices of stocks and high dividend yields attract buying interest that cannot be resisted by smart money, as more audited corporate earnings hit the market, going forward. This is despite the likely continuation of the mixed intraday movement in the midst of selloffs, with investors buying increasing positions in undervalued stocks ahead of dividend declaration. This is also against the backdrop of the fact that the capital wave in the financial market may persist in the midst of relatively low-interest rates in the money market, high inflation and unstable economic outlook for 2020.
Also, investors and traders are positioning in anticipation of the 2019 full-year earnings reports, amidst the changing sentiments in the hope of improved liquidity and positive economic indices which may reverse the current trend.
We see investors focusing on the upcoming full-year earnings season, targeting companies with strong potential to grow their dividend on the strength of their earnings capacity.
Again, the current undervalue state of the market offers investors opportunities to position for the short, medium and 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 Traders & Investors Summit held in Lagos.
Also, traders and investors need to change their strategies, because of the NSE’s pricing methodology, the CBN directives and their impact on the economy in the nearest future.
Meanwhile, the home study packs of our Invest 2020 Opportunities and Trade Ideas Summit, containing the 10 Golden Stocks for 2020 are available. To obtain your pack send ‘Yes’ or ‘Stock’ to 08028164085, 08032055467, 08111811223 now.

Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
amberose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467