Trading in the month of June started on a very positive note from the first day, even as analysts draw attention to existing landmines in the socio-political and economic environment, including the fact that the Acting President, Yemi Osinbajo, has failed and/or refused so far to give his much prized assent to the 2017 Appropriation Bill, six months already into the year.
The seeming economic recovery mode, despite this and other downsides, will continue in the new month as we expect more of positive economic data and the eventually signing of 2017 budget into law, thereby triggering the implementation of Economic Recovery and Growth Plans (ERGP) that would hopefully complement the CBN’s effort at boosting productivity that will create employment and sustain the already noted recovery. Reasons for this are not far-fetched, given the relative peace and security that have since returned to the nation’s troubled Niger Delta region and stability in oil output, all of which would impact the nation’s revenue positively in the coming months.
In June, we expect inflation rate for May (to be released by the National Bureau of Statistics) to drop further.
Already, the Purchasing Managers Index (PMI), which measures the temperature of selected companies in Nigeria across five variables such as: output, employment, new orders, delivery times from suppliers and stocks of purchases, in the month of May, which was released on Thursday, June 1, remained positive. It however dropped to 54%, down 4% from the level in April.
Also, the March year-end accounts are expected to strengthen market fundamentals if the numbers beat expectations and are in line with Q1 earnings reports, to further confirm improvements in the business environment. The low valuation in the market despite the recent rally in many stocks still remain undervalued on the strength of the intrinsic value that should guide the investing public to know where to look while seeking to invest profitably for the rest of the year.
Traders and investors who understand the importance of combining fundaments and technical analysis in making investment decisions in the stock market should take this opportunity of pullback to position in some sectors for short, medium and long term gains, especially in the banking, Insurance, agribusiness, service sector, oil and gas after carefully study of the recent price pattern and fundamental data available to the market.
What to expect in June and July
• Release of March full year earnings as June is the end of the statutory 90-day for audited results. This numbers from blue-chip companies may strengthen market fundamentals, if positive.
• The oscillating trend of equity prices as a result of repositioning of portfolio along the line of positive numbers and profit taking.
• Market outlook for June remain mixed as the month has been in decline for two time in last three years and was up once. But with the positive sentiment and strong momentum as the market expect, the economic recovery to be strengthened with the implementation of 2017 budget immediate is sign into law. As CBN’s has so far sustained its intervention in the FX market that had boosted liquidity and confidence in the economy and market which is expected to impacted business activity ahead of second half of the year.
• Low price to earnings in market may trigger more demand for stocks, but invest wisely, using bids, offers and volume when taking decisions as a trader.
• Managing risk and protecting capital at this point is very important, so you will be able to determine when to buy or sell, by watching the stocks and the market, using technical analysis.
• Let numbers released by companies guide you decision and time to stay in that position.
• Being the last month of the second quarter of the year, activities are likely to look up as investors reposition for Q2 earnings season and second half of the year.
• In the coming Investdata comprehensive stock market trading and investing workshop where short trading strategies and how to identify quality companies to invest before the market look toward it.
OMORDION AMBROSE
CHIEF OPERATING OFFICER
INVESTDATA CONSULTING LIMITED
TEL: 01-4724645,08028164085,07028061501
ambroseconsultants@yahoo.com
