With 2019 In Final Hours, Investors Eye Full-year Earnings Season, Strong Growth Potentials, Dividend

Market Update for December 30

The countdown to the end of the year 2019 entered its very last few hours on Monday, with the nation’s equity market extending it bull-run for the second consecutive session on positive sentiments and increased demand for highly capitalized stocks. There was also an improved traded volume that revealed the expected year-end window dressing by fund managers and listed companies, which helped some stocks to close higher.
The change in the trading pattern since the commencement of the new pricing methodology was announced by the Nigerian Stock Exchange, increasing the activities of day traders in a market that defied the annual Santa Claus rally which had for almost a decade supported positive performance in the month of December.
Trading on the NSE so far this month has left the index down by 1.45%, despite the positive sentiment and high volatility recorded so far in this period on increased economic activities and capital wave with many investment options maturing this last month of the year, thereby making more funds available. This is due to restrictions introduced by the Central Bank of Nigeria CBN, depriving fund managers of the opportunity to reinvest in the maturing instruments.
The level of indecision among fund managers till this moment has left the market oscillating, despite the low-interest rate in the money market and declining yields in the fixed income market.
At this stage of the market, we advise against any form of panic selling. Rather, take a strategic position in sectors that have suffered huge losses, but still have the potentials to rebound in the new year and beyond, as players take timely advantage of low prices around the market. The table above reveals that Nigeria’s equities market has enjoyed more positive trends in the month of December over the past decade, arising from the Christmas boom and driven by year-end portfolio balancing among investors and traders.
The table below shows the performance of the NSE index for December 2010-2019:

10-Year  NSE Index Movement For The Month Of December
2010 24,764.65 24,770.52 0.02
2011 20,003.36 20,730.63 3.64
2012 26,494.44 28,078.80 5.98
2013 38,920.85 41,329.19 6.19
2014 34,543.05 34,657.15 0.33
2015 27,385.69 28,642.25 4.59
2016 25,241.63 26,874.62 6.47
2017 37,944.60 38,243.19 0.79
2018 30,874.17 31,430.50 1.80
2019 27,002.15 ? -1.45

Meanwhile, Monday’s trading opened slightly on the downside before oscillating between the mid-morning and afternoon on a strong buying interest in medium and high cap stocks like Nestle, Dangote Cement and Seplat which pushed the NSE index to an intraday high of 26,609.34 basis points, from its low of 26,226.18bps. It, thereafter, finally closed the day at the day high on an increased traded volume. Market technicals for the session were positive and strong, with volume traded higher than the previous session, in the midst of positive breadth and positive sentiment

Index and Market Caps
The benchmark NSEASI, at the end of the day’s trading, gained 192.86bps, closing at 26,609.34bps from the previous 26,416,48bps close, representing a 0.73% growth, just as market capitalization gained N93.4bn to close at N12.85tr, from an opening value of N12.75tr, which also represented a 0.73% appreciation in value.
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Monday’s upturn was driven by Nestle, Seplat, Flour Mills Zenith Bank, FBNH, UACN, UBA, and NB Plc, all of which impacted on the NSE’s Year-to-Date loss, raising it to 15.34%. Market capitalization YTD growth fell to N1.04tr, representing a 0.73% growth over the year’s opening value of N11.72tr.

Bullish Sector Indices
All sectoral performance indexes closed green, except for the NSE Banking index that fell by 0.70%, while the NSE Oil/Gas index led the gainers, after inching 5.08% up; followed by the Consumer Goods Index’s 2.13%; and the NSE Insurance, improved by 1.02%, while the NSE Industrial Goods index followed by 0.42%.
Market breadth was positive as advancers outnumbered decliners in the ratio of 23:12, while market activities increased, as transaction volume and value increased by 72.04% and 136.4%, as stockbrokers crossed 382.81m shares worth N7.19bn, compared to previous day’s 222.51m units valued at N3.04bn. This volume was driven by Transcorp Plc, Guaranty Trust Bank, Access Bank, UBA and Zenith Bank,
NEM Insurance and Eterna were the best-performing stocks of the day, as they gained 10% 7.89% to close at N2.42 and N3.30 respectively, on low price attractions and market sentiments. On the flip side, C & I Leasing and Learn Africa lost 10% and 9.60% respectively, closing at N5.40 and N1.13 on market sentiment and profit-taking.

Market Outlook
We expect a mixed performance as the year 2019 winds down amidst profit-taking, while investors take advantage of low prices, ahead of the year-end rally with the continuing capital flow and repositioning in value stocks. There are, also, the changing sentiments in the hope of improved liquidity and positive economic indices.
We expect that Investors would focus on the upcoming full-year earnings season, targeting companies with strong potential to grow their dividend on the strength of their earnings capacity.
Again, the current undervalued state of the market offers investors opportunities to position for short and medium-to-long-term, which is why investors should target fundamentally sound and dividend-paying stocks for possible capital appreciation as the year winds down, giving way to 2020, just as was noted in the 10 golden stocks and trading ideas for 2020 discussed during the Investdata 2020 Traders & Investors Summit.
Also, traders and investors need to change their strategies owing to NSE’s pricing methodology, CBN directives and its impact on the economy in the nearest future.
Meanwhile, we appreciate all that made Invest 2020 Traders and Investors Summit a success. The home study packs are available. To grab your pack, Send Yes or Stock to 08028164085, 08032055467, 08111811223 now.

Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08032055467