NGSE Month-end Window Dressing Continues, As Investors Reposition Ahead Of Q2 Reports

Market Update for June 24
Trading on the Nigerian Stock Exchange on Monday was once again very volatile and mixed, reversing Friday’s gain with the composite All-Share index beginning the week bearish, amidst a high traded volume.
The increasing volume traded and bulk buying in the market in recent times signals accumulation and imminent reversal of the downtrend as risk-to-reward remains low. This is given the volume and price action patterns as market dynamics continue changing ahead of the coming Q2 earnings season that could close the market performance index above it 50-Day Moving Average. That notwithstanding, however, liquidity levels have remained low.
Investors continue to position ahead of the Q2 numbers of companies on the NSE, just as the market may leverage on the possible announcement of President Muhammadu Buhari’s new cabinet, if those nominated for clearance by the Senate meet popular expectation of those who are seen capable of changing the present narrative of low investor confidence in the entire economy. But, ahead of the Ministerial list, the Federal Government, on Monday, finally inaugurated the board of the Securities & Exchange Commission (SEC), four years after dissolving it and turning deaf ear to strident calls within the period to reconstitute it for the proper function of the nation’s capital market (READ). The inauguration is expected to strengthen the commission and boost investor confidence; given that perception is one way of the changing market dynamics today.
Also on Monday, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), unveiled his vision for the second five-year term, detailing what should be expected in the area of helping to drive economic growth and development. He spoke of his vision of Nigerian banks becoming robust institutions that can find their space among the world’s top 500 and be strong enough to withstand troubled times in the global and domestic economy. To attain this height, he expects that Nigerian banks must recapitalize (READ MORE). Investdata will over the coming days and weeks review this commitment, which may result in what Nigerians saw during the consolidation era of Prof. Chukwuma Soludo.
Already, there has been huge volume movements and seeming ownership realignments noticed in the Zenith Bank and Wema Bank, which we expect will become clear in the next couple of months.
Meanwhile, Monday’s trading session opened slightly in the upside, a situation which lasted till midday before pulling back by the afternoon on the strength of profit taking and selloffs in some medium and high cap stocks. In the process, the index touched intraday low of 29,765.31 basis points, from a high of 29,868.39bps before closing the session lower at 29,809.20bps on positive breadth.

Index and Market Cap
The benchmark NSEASI at the close of trading shed 42.19bps at 29,851.29bps, after opening at 29.809.20bps, representing a 0.14% drop, just as market capitalization lost N18.53bn to close at N13.14 trillion, from its opening value of N13.16tr, which also represented 0.14% value loss.
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The downturn followed selloffs and profit-taking in Nigerian Breweries, Guaranty Trust Bank, Access Bank, Ecobank Transnational Incorporated, FBN Holdings, Wema Bank, Dangote Sugar, and CCNN. This impacted negatively on the Year-to-Date loss position which rose to 5.16%, just as market capitalisation gain also dropped to N1.27tr, or 13.11%, from the year’s opening level of N11.72tr.

Mixed Sector Indices
The sectoral performance indices were largely bearish except for the NSE Consumer goods and Oil/Gas which closed in the green at 1.13% and 0.39% respectively, while the NSE Banking index led the decliners, after shedding 1.42%. It was followed by Industrial goods with 1.29%, next was Insurance with 1.06%.
Market breadth was positive as advancers outnumbered decliners in the ratio of 24:19, just as market activities were up in volume and value traded by 214.18% and 153.41% respectively to 573.67m shares worth N10.21bn, up from the previous day’s 182.59m units valued at N4.03bn. This volume was boosted by transactions in financial services and industrial goods stocks like Zenith Bank, Access Bank, Lafarge Africa, Guaranty Trust Bank, and LASACO.
The best-performing stocks for the session were Champion Brewery and GSK, which led the advancers’ table with 9.86% and 9.63% respectively to close at N1.56 and N10.25 per share, on market forces. On the flip side, NEM Insurance and CCNNl lost 10% each to close at N2.52 and N12.15 per share on profit-taking and market forces respectively.
NPF Microfinance released their full-year 2018 earnings report to the market and declare 5 kobo dividend, despite its mixed numbers during the period, alongside its first-quarter result which had a mild performance with Earnings Per Share (EPS) of eight kobo, marginally lower than the previous 9kobo

Market Outlook
We expect the end of quarter window dressing by fund managers and portfolio repositioning and balancing for month end and the Q2 earnings reporting season to reverse the trend. As bargain hunters are likely to hit the market any moment from now, while discerning investors are taking advantage of low valuation to ahead of March year-end numbers and second half interim dividend stocks.
They may also take into consideration the expected economic reforms as government announces its much-awaited new cabinet, just as plans by the Central Bank of Nigeria (CBN) to reduce banks’ participation in government securities is expected to boost private sector lending to drive economic activities and investment.
There is also the likely end of month trading account balancing in the midst of portfolio repositioning in expectation of interim dividend in Q2 numbers, especially banking stocks.

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CRO|Investdata Consulting Ltd
Tel: 08028164085, 08032055467