Market Update 18

FG’s Silent On Economic Reforms, Growth Puts pressure On Stock Market.

The market continued to slide against our expectations last week, as the Composite index lost momentumwith the high cap stocks suffering price losses. The sustained trend in the market has eventually created opportunity for smart money to accumulate strong fundamentally stocks at a discount. The new government’s pronouncement at this point is very important with many local and international investors awaiting policy direction as a guide to direct flow of investment and associated risk before action is taken. The country's capacity utilisationat 60.3 per cent; interest rate at 13 per cent, inflation rate, 8.7 per cent: and government debt to GDP ratio of 11 per cent; are indeed not bad starting points for consolidated building of the economy. The panic selling pressure on the exchange saw overall bearish activities resulting in the Composite NSE All Share Index shedding161.25 basis points,closing at 33,257.90 points from an opening figure of 33,621.75, representing a 1.08 percent decline.The negative year-to-date performance of the market slipped to 4.07 percent

NSEASI

NSEASI closed above the lower band by 19.8 per cent. Bollinger Bands are 59.29 per cent narrower than normal. The narrow width of the bands suggests low volatility, when compared to NSE ASI's normal range. Therefore, the probability of volatility increasing with a sharp movement in stock prices have increased for the near-term.The market break down of peanut formation is a sign of weakness, but reversal is imminent as the volume traded continued to thin out, due to the fact that the market is waiting to see the reform policies to be unveiled by the government. The current mood of the market calls for the very short trading, using tops and bottoms as guide for positioning, giving thatthe trend is below the 50 days moving average.

The bears extendedtheir dominance of activities last week. Market breadth closed in favour of the bears as more equities closed negative in all but one of the trading days this week. Consequently, the ASI recorded gains (+0.29%) in just one of trading days. Generally, transaction level appreciated relative to last week's levels on the activities of bargain hunters and special trading. The index traded in the lower band of 33,000 psychological line. In the same negative trend, market capitalisation shed about N125billion to close at N11.35 billion last week largely driven by sell-off activities in high caps. With the exception of the NSEASEM and NSEINS, that recorded positive returns of 0.17 and 0.77 percent respectively, other sector indices closed in red, led by NSEOILGAS with -1.88 percent as pessimism persists in the market

The market transaction level in terms of volume of trades, dropped 20 percent, while value of trades increased by 24 percent relative to the numbers recorded in the previous trading week. At the close of trading activities this week, 1.24 billion shares valued at N21.72 billion were exchanged in 18,625 deals, compared with 1.54 billion shares valued at N17.52 billion exchanged in 17,349 deals in the previous trading week.

During the week, the NSE ASI remained in the red on weak investors' risk appetite for equities, with the new government remaining silent on its economic policy.

Market Outlook

We expect the market to remain in the same mood, unless there is a statement from the government on the economy or any news on fundamentals that would boost the market. Traders and Investors taking this opportunity to build portfolio should think medium and long-term, as the market moves close to bottoming out.    

STOCKS TO WATCH

Africa Prudential, Zenith Bank, NB, Flourmills, Access Bank, FBN Holdings, Transcorp, Dangote Cement and United Capital

DIVIDEND STOCKS
Company	Dividend	Q4 Eps 2014	Q2 Eps 2014
Africa prudential	0.35	0.61	0.28
Total oil Nigeria	9.00	13.03	6.14
GTB	1.50	3.35	1.5
Zenith bank	1.75	3.17	0.76
Mobil oil	6.60	17.73	13.36
UACN	1.75	1.75	1.81
Access bank	0.35	1.88	0.99
NB	3.50	5.62	3.16
Dangote cement	6.00	10.84	5.6
Lafarge africa	3.60	7.61	5.18
Dangote sugar	0.40	0.97	0.57
FBNH	0.10	2.54	1.14
GSK
SECOND QUARTER EXPECTED EARINING IN JULY 2015
Securities	Q4 Eps 2014	Q2 Eps 2014
Livestock Feed	0.13	0.04
Zenith Bank	3.17	0.76
Africa  Prudeential	0.61	0.28
Transnational Corp	0.09	0.18
UACN	1.75	1.81
Cadbury	0.81	0.69
GTBank	3.35	1.5
Nestle Nigeria	28.05	14.93
NB	5.62	3.16
Unilever	0.64	0.39
UBA		0.69
Access Bank	1.88	0.99
Diamond Bank	1.96	0.95
FBNH	2.54	1.14
FCMB	1.12	0.48
Fidelity Bank	0.48	0.28
Dangote  Cement	10.84	5.6
Skye Bank	0.56	0.44
Stanbic IBTC	3.15	1.59
Sterling Bank	0.25	0.26
Lafarge Africa	7.61	5.18
Unity Bank	0.09	0.1
Wema Bank	0.06	0.04
Nahco	0.39	0.26
May & Baker	0.06	0.04
Pharm Deko	1.01	1.07
Courtevil Business	0.09	0.06
Berger Paints	0.51	0.37
CAP	2.37	0.83
CCNN	1.53	1.26
Forte Oil	3.10	2.90
Trans-Nationwide	0.34	0.07
Portland Paints	0.37	0.31
Premer Paints	0.07	0.02
Eterna Oil	0.99	0.75