Market Update for week ended Feb 24 and Outlook for Feb 27
The Nigerian stock market, last week, recorded the first weekly gain so far in February, amidst investors’ expectation for the long awaited economic recovery plan the Federal Government promised to make available to Nigerian before the end of the February which is ends on Tuesday. Incidentally, the period was the last full trading week for the month.
The government has also expressed desire for national action plan to remove bottlenecks to the ease of doing business in the country, with priority on entry and exit of goods, entry and exit of people, and transparency in government’s procurement process, among others. There are bills for Act to established collateral registries and credit bureaux for small and medium scale business in its bid to improve ease of doing business in the nation. While these moves are welcome if implemented faithfully with the needed political will, the investing community looks forward to seeing economic recovery action plans and how the government will leverage on the peace gradually returning to Niger Delta to boost output and revenue based on the favourable deal brokered by the Organisation of Petroleum Exporting Countries (OPEC).
There also the necessity for seriousness in implementing the stimulus packages of government for critical sectors expected to propel economic recovery, besides the agricultural sector that is government is seriously focusing attention to the detriment of other sectors and industries. Government must also review some policies that have significantly raised the cost of doing business and living, just as a strong collaboration with the monetary authority to reduce cost of borrowing to aid businesses, among others.
At the same time, early approval of the 2017 budget that would provide a general direction for businesses will go a long way to boost economic activities in the country. But another fear is the emphasis on more external borrowing, with its attendant cost.
Meanwhile, the Composite index NSE All-Share Index gained 85.46 points to close last week at 25,250.37 points, from an opening figure of 25,164.91 points, representing a 0.34% growth on a low volume that signal cautious trading, even as investors continue to reposition and accumulate more in some positions as more earnings reports are expected in the market, going into the month of march. The buying volume of total transactions for the week was 42%, while selling position was 58% to reverse the previous weeks bear transition.
Similarly, market capitalisation for the period closed higher at N8.74 trillion, from an opening value of N8.71 trillion, representing 0.34% appreciation in value, with market recording mixed performance of three up market and two down trading sessions.
The advancers log for the week were dominated by low, medium and high cap stocks due to the interplay of market forces, earnings expectations and reaction to scorecards already released.
The growth in equities price for the period further reduce the NSEASI’s year-to-date negative position to 6.04%, also for the period market capitalisation adjusted its lost position to N508.33 billion.
Market breadth for the week was negative and weak with the number of decliners outpacing advancers in the ratio of 34:18 on a low volume of trade that support weak market, amidst mixed sentiment and two companies releasing their 2016 full year results.
Global stock markets during the week were mixed as the U.S Government and China traded words on currency devaluation and manipulation for trade advantage. The crude oil market and its price internationally is attracting attention of investors as they placed the biggest bet in history that prices will rise, as the world’s largest exporters cut output to reduce a glut in supply, and the futures market is suggesting for the first time in a year that they could emerge winner.
U.S major market indices were mixed over the past week as valuation concern lingered with over 66% of earnings released beating market estimates and pushing prices above roof, with forward price to earnings multiple of 17.6x- the highest level in more than a decade. This has made traders question whether the market has moved too far in a short time, as rate hike is around corner again, to cap apprehensions among investors.
Japanese Nikkei and Germany‘s DAX for the period closed higher, whereas Britain’s FTSE 100 was down for the same period.
In Europe, Q4 growth were below expectation as it came weaker, but the month’s Purchasing Managers Index (PMI) showed a fresh strength to still give investors hope in the region.
In Asia, China recently shook up its economic management team in a move that left some traders concerned about troubled times ahead, especially given its dwindling reserve and significant debt projection.
Coming back home, the composite index opened the week, on a positive note of 0.34% gain, a trend which continued on the second trading session, where it recorded a marginal gain of 0.01%, before it was reversed at the midweek’s trading day when it slide down by 0.01%. This was however reversed when it gained 0.63% on Thursday. This was however short-lived, as it shed 0.62% in the last trading day of the week to reduce the week, closing the period at 0.34%.
The NSEASI and all the sectoral indices for the period were mixed with NSE Premium, NSE Oil/Gas, NSE Lotus and NSE Banking, NSE Pension, NSE Asem and NSE Industrial were in red.
Transaction levels for the week, measured by aggregate volume which was down 45.98% to 765.66 million shares from 1.07 billion shares value was up by 22.41% from N8.61 billion to N9.72 billion. This was in contrast to the closing levels of previous week. In the week under review also, a total of 765.66 million shares valued at N9.72 billion were traded in 12,468 deals, compared with 1.07 billion shares worth N8.61 billion, exchanged in 14,486 deals in the previous week.
During the week, NB and Africa Prudential released their 2016 full year earnings reports to the market with dividend of N2.58 and 30 kobo respectively. Also NB and Guinness led the advancers’ log with 13.04% and 11.57% respectively, while the flip side was topped by Unilever and Forte Oil, which suffered 16.18% and 14.96% decline respectively.
As the month is ending on Tuesday, it is expected that fund managers and market players will balance their trading accounts. The market is likely to continue in the up and down movement as mixed sentiments persist owing to cautious trading.
Also, this week, the market expects the nation’s 2016 Q4 GDP data, Nestle Nigeria Plc report and others.
Again, the time to combine technical and fundamental analysis for your trading decisions is now, to enable you know the support and the resistance levels.
Train yourself and study to know the new approach to adopt at this point and going forward.
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STOCKS TO WATCH
Eterna, Total, Fcmb, Presco, Zenith Bank, UBA, and Aiico
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