Uncertainties Continue, As NGSE Sheds More Amidst Uninspiring Q2 Earnings Reports

Market Update for July 24, 2018

The nation’s equity market on Tuesday reversed, wiping out the back-to-back gains recorded in two previous trading sessions as the market reacted to the mixed earnings performance that continued to hit the exchange, with most of these numbers disappointing and coming way below market expectation. They however continue to reflect the impact of national economic slowdown, despite the relatively high price of crude oil, exchange rate stability within and continued decline in the inflation rate for June as revealed by the latest report of the National Bureau of Statistics (NBS) on Monday.
Among the earnings reports released on Tuesday, the performance of Nahco and CAP was impressive numbers having earnings per share of 26 kobo and 131 kobo respectively, while Lafarge Africa and Dangote Sugar were below market expectation.
Also, the political uncertainties surrounding 2019 elections had continue to militate against investors’ confidence, especially with Tuesday defections from ruling party to other parties ahead of next month’s deadline for shadow election or political party primaries, according to time table of the Independent National Electoral Commission (INEC).
In the midst of all these, according to the communique of the Monetary Policy Committee of the Central Bank of Nigeria (CBN), at the end of its two-day meeting on Tuesday, there is the sustained monetary policy normalization in the US resulting in capital flow reversals, which is noticeable in the stock market whose indicators continue to decline.
Amidst all of these, investors must therefore up their games, by learning new strategies that would enable them take advantage of this situation to build wealth and recoup losses by identifying stocks set to soar and those that could crash further as developments continue to unfolding. All of these would form the talking points between experts and participants at investdata comprehensive stock trading and investing workshop this Saturday, July 28, 2018 (SEE DETAILS BELOW).
Still on Tuesday’s MPC meeting, the members played safe by voting to retain rates as was anticipated by most analysts, considering the need to manage inflationary pressure. This is in view of the expected impact of the liquidity surge resulting from implementation of the 2018 budget, and rising FAAC disbursement, helped by the rise in oil price and sustained output level, in the second half of the year. Add this to the anticipated pre-election spending and the possibility of salary increase. Still on the latest MPC meeting’s outcome, unlike in the past when only one member voted to raise the benchmark rates, three members thought it is time to hike rates. As things stand, it may not be too far from now, when more members would see reasons to vote for a raise (READ MORE).
Meanwhile, market technicals for the day were negative and mixed as Tuesday’s volume traded was high in the midst of negative market breadth and sentiments as revealed by Investdata’s Daily Sentiment Report, showing a ‘sell’ volume of 97% and ‘sell’ position at 3%. Volume index was 1.20 of the day’s total transactions.
Energy behind the day’s market performance was weak, as reflected in the money flow index at 27.49 points, slightly up from previous day’s 27.40points. This is an indication that funds are flowing once more into the market gradually, but there is low liquidity at the peak earnings season.

Index and Market Cap
The NSE All Share index for the day lost 256.72 basis points, closing at 36,455.24bps, after opening at 36,711.19bps, representing a 0.70% growth, just as market capitalization, dropped by N93.1bn to close at N13.21tr from an opening value of N13.3tr, also representing 0.70% value loss.
If you haven’t joined Investdata Buy & Sell Signal setup, where you can look over our shoulder and follow to know when to hold cash and take advantage of the watchlist of stocks for different investment purposes that you may position in, as the market oscillate. To register and become a member send Yes or stocks to the phones numbers below. The number of stocks on our watch list has increased due to the prolonged correction. Take advantage of this service to buy right and sell right.
Tuesday’s downturn was due to weak earnings and political tension that triggered sell-off in high cap stocks like Dangote Cement, Nigerian Breweries, Lafarge Africa, ETI,Oando, Dangote Sugar, Presco, Nascon, Transcop, PZ, Honeywell and Guinness. This impacted negatively on the NSE’s Year-to-Date return, by deepening its negative position to 4.68%. This was just as market capitalization within the period lost N355.43bn, same as 2.53% below the year’s opening value.
Bearish Sector Performance
Sectorial performance for the day were largely bearish, except for the NSE Insurance that was in the green at 0.18%, while NSE banking, consumer goods, industrial goods, oil and gas were in red. Market breadth turned negative as decliners outweighed advancers in the ratio of 29:16, to halt the two day up market.
Market activities were up in volume and value by 67.36% and 100.10% respectively to 378.7m shares worth N4.42bn, from the previous day’s 226.27m units valued at N2.21bn.
Transactions for the day were boosted by trading in financial services, conglomerates and aviation service providers- Medview Air, Transcorp, Zenith Bank, FBNH and Access Bank that witnessed increased trading to top the activity chart.
Cutix and Custodian Investment were the best performing stocks that topped the advancers’ table after gaining 10% and 9.91% respectively to close at N3.63 and N6.10 each, due to expected dividend.
On the flip side, Beta Glass and Lafarge Africa were the worst performing, losing 10% each to close at N72.90 and N29.25 on market forces and unimpressive earnings report.
Market Outlook
As we expect more Q2 earnings reports to hit the market today, it is the state of these numbers that will determine direction as more disappointing reports will drive the market further down or reversal if numbers beat expectation, considering the undervalued nature of equities and the high yields. Investors should review their positions in line with investment goals and act as events unfold in the global and domestic environment.
However, we would like to reiterate our advice that investors should go for equities with intrinsic value, especially during this season were Q2 interim dividend payment are expected in the market arena very soon.
We advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst improving company, economic and market fundamental.

Investdata Stock Market Training Workshop

The Date: On Saturday, July 28, 2018, Venue Ostra Hall & Hotel Alausa Ikeja Opposite NNPC Gas Plant

Theme: Comprehensive Stock Trading & Investing Toolkit for Rest of 2018

Sub Topics

Review of 2018H1 Market & Economic Performance: How Fiscal Reforms and Stimulus Will Support the Market/Economy in 2018H2.
In this presentation, the speaker will discuss how historically the Fiscal and Monetary policies have influenced Nigeria’s stock market, the implications for the second half and it would drive equity prices higher as recovery continues, impact of the new NSE market Structure.

2018H2 Trading Checklist: How to Find Winning Stocks in Nigeria’s Volatile Equity Market
After the prolonged correction, volatility is here to stay for the rest of 2018. Is it time to start worrying about losses suffered so far, a flattening yield curve or time to relax due to the outstanding earnings season? Better yet, is there a way to harness increased volatility to your advantage? Our facilitator, a stock market expert will show you how to handle increased volatility in 2018. He’ll offer insights into forces impacting today’s market. He will share, using real-time examples, his ultimate checklist to finding winning stocks propelled by volatility. This simple strategy allows you to quickly evaluate stocks and to better time entry and exit points, while understanding market forces moving your portfolio.

How To Generate Consistent Superior Equity Returns and Income With Dividend Stocks
Here, the expert will discuss his approach to generating equity income by investing in undervalued dividend stocks, what he looks out for when trading dividend stocks at a discount to historical valuations on multiples of price to sales, earnings, cash flow, book value, and enterprise value to EBITDA. In addition, he requires companies to have positive operating cash flow over the past 12 months, with dividends covered comfortably by cash flow.

Powerful Patterns and Effective Strategies for Trading Shifts in Market Volatility
Recent and ongoing changes in market volatility present both risks and opportunities for discerning traders. Learn some of the most effective strategies for taking advantage of the high-probability trading opportunities available in equities, while minimizing risks associated with stock market trading. The six most powerful patterns in the market to trade, how to know which patterns and strategies to specialize in for consistent results and the critical difference between oscillating and momentum patterns.

Kindly call or send yes to 08032055467, 08028164086 or 08111811223.

Ambrose Omordion
CRO|Investdata Consulting Ltd

Tel: 08028164085, 08032055467