Market Update for November 6
Again, trading on the nation’s stock market, at midweek, closed bearish, propelled by continued selloffs among highly capitalized stocks in the midst of huge buying opportunities and cautious trades with a renewed focus on value investing, given that the Q3 numbers reveal the true state of the economic and company fundamentals. The expected redirection of funds into the real sector and stock market remain slow, hampered by low confidence in the entire system, especially on the economic front which has limited inflows into the market.
Looking at performance across the sectors during the earnings season and after, accumulation in some sectors and stocks shows that value investing is gaining ground as discerning investors and traders position to turn the prevailing big opportunities to profits in no distant time.
With the prospects of a trade-war-absent global economy, going forward into 2020, there is a growing likelihood, in our view, of an economic boom that would coincide with the sustained regulatory tightening on Nigeria’s economic disrupters. With that, those companies and industries that have been disrupted are in the position to regain market share. That will happen, only where there is tremendous pent-up value in the stock market.
Midweek, trading started on the downside in the morning and was sustained throughout the session as sell down continued in some high cap stocks, pushing the NSE index to an intraday low of 26,223.66 basis points, where it to closed for the day, from its high of 26,367.19bps, on a lower traded volume.
Market technicals for the day were negative as volume dropped lower than the previous day’s in the midst of a negative breadth and high sell pressure, as revealed by Investdata’s reports showing a ‘sell’ volume of 100% and buy’ position of 0%. The transaction volume index stood at 0.98, while the impetus behind the day’s performance remained weak, as Money Flow Index slowed down to 38.62 points, from the previous session’s 39.48bps. This is an indication that funds exited the market. During the session, Presco made a new three-year low.
Index and Market Cap
At the end Wednesday’s trading, the composite index NSEASI shed 151.69bps to close at 26,223.66bps from its 26,375.35bps opening, which represented a 0.58% decline, just as market capitalization lost N73.84bn, closing at N12.77tr from an opening value of N12.84tr, which also presented a 0.58% value loss in investors’ portfolio.
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Midweek’s downturn was due to the persistent sell down in stocks like Dangote Cement, MTN Nigeria, Presco, Stanbic IBTC, UBA, International Brewery, and FBN Holdings. These impacted negatively on the NSE’s Year-to-Date loss, which rose to 16.57%, while market capitalization gain fell to N1.04tr, representing 8.91% up from the year’s opening value of N11.72tr.
Bearish Sector Indices
All the sectoral performance indexes were down on Wednesday, except for the NSE Oil/Gas that closed flat, while the NSE Consumer Goods index led the decliners, after shedding 0.50%, followed by NSE Industrial goods by 0.45%, while the NSE Banking and Insurance indices shed 0.05% and 0.03% respectively.
The session’s breadth was negative as decliners outnumbered advancers in the ratio of 12:10, while market activities were down in volume and value traded by 23.68% and 21.80% respectively to 232.22m shares worth N3.12bn from the previous day’s 304.28m units valued at N3.99bn. Volume was boosted by transactions in UBA, Access Bank, Zenith Bank, Guaranty Trust Bank and Transcrop Plc.
Cornerstone Insurance and Law Union were the best-performing stocks, topping the advancers table, after gaining 8.89% and 8.70% respectively to close at N0.49 and N0.50 each, on the back of positive sentiments for the ongoing industry recapitalization and market forces. On the flip side, Presco and International Brewery lost 9.90% and 9.69% respectively, closing at N34.60 and N10.25 on the unimpressive earnings and market forces.
Market Outlook
We expect the mixed trend to continue on value investing and selloff as the market continues to interpret the Q3 scorecards and align their portfolios along with the impressive numbers, in expectation of improved liquidity and positive economic data. This is especially as the NSE’s new lows offer investors opportunities to position for short and medium-to-long-term views. We expect that investors would target fundamentally sound and dividend-paying stocks for possible capital appreciation as the year draws down.
Also, traders and investors need to change their trading strategies due to the review of the NSE’s pricing methodology, now that all class of equities need uniform 100,000 units to effect any price changes. This may be part of efforts to mitigate the persistent price decline that has seen many stocks trading at between their five and ten-year lows and even more, in recent times.
Discerning investors should latch onto this, meanwhile, as a way of averaging down and recouping their investment immediately a recovery stage sets in, helped by economic policies, when things start to change gradually. In the process, equity prices will be influenced positively, while investors watch for sectors like insurance, banking, Industrial Goods, services, as well as oil/gas that have become defensive in recent times and could go bullish in no distant time.
Furthermore, we note that all eyes are on the newly appointed economic advisory team to settle down quickly and begin churning out policies capable of turning things around.
Take Action
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Sub-Topics
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D. Mastering Earnings& Dividend Game Plan For 2020 Investing Opportunity & Beyond
E. Recession or Boom: Five Trading Strategies For Picking Best Stocks In Good Times or Bad
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Expected Takeaways
• Pinpointing chart patterns for Profitable Trades and investing opportunities in an uncertain market environment
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Date: December 7, 2019
Venue: Ostra Hall & Hotels Ltd, Off OtunbaJobifele Way, Opposite NNPC Gas Plant C.B.D, Alausa, Ikeja Lagos, Nigeria.
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Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467
