Market Update 26

NSE Declines Further As Investors Continue Flight To Safety

The continued headwinds in Nigeria's macro-economic environment has kept the nation’s equity market under a prolonged downturn. The mixed performance recorded last week, it must be noted, is one sure signal of a recovering market. It however still needs other drivers like improved liquidity to boost trades and rekindle the confidence of investors, while serious economic reform policy is equally necessary to propel a progressive economy that could empower Nigerians again and help investors recoup their huge losses.

The global market is under pressure, particularly after China's currency devaluation and its recent disappointing manufacturing data, coupled with the sharp drop in oil price, all factors that has forced European and U.S stocks to decline. The composite index- NSE ASI shed 2.70 per cent from the week's opening figure of 30,705.62 closing at 29,878.33 with difference of 827.29 points. This brought the negative year-to-date returns to 13.79 per cent at the end of the period under review.   The market breadth for the week was still negative as the bears dominated with the number of decliners outpacing that of the advancers in the ratio of 61:11.

The fact that the composite index trading below the 30,000 level is a serious setback for the market and should be of serious concern to the government and regulators of the market. Added to this the fact that last week, market capitalisation of the exchange lost N280 billion to close at N10.24 trillion from an opening value of N10.52 trillion. Equally worrisome is the fact that within the period, all the market's sectoral indices faced the same directions, delivering negative returns on investment with no sucour for investors. Despite the continued results delivered by stocks in the sector, which continued last week with the performance of Access and GT Bank, following after Zenith and FBN Holdings, among others, the NSE Banking index lost all of 4.5 per cent in the period under review. The trio of Zenith, Access and GTB also offered an interim dividend of 25 kobo each in the past fortnight.

Daily NSE ASI Time frame

Also noteworthy is the fact that index is still below the three major moving average of 20, 50 and 200-Day. The following indicators RSI, Stochastic Oscillator and CCI have signaled imminent reversal JUST confirm and position.  However, the RSI just crossed above 30 from a bottoming formation.

NSEASI closed above the lower band by 16.0 per cent. Bollinger Bands are 48.04 per cent narrower than normal. The narrow width of the bands suggests low volatility as compared to NSEASI's normal range. Therefore, the probability of volatility increasing with a sharp index move has increased for the near-term. The bands have been in this narrow range for nine periods.  During the past 10 bars, there have been two white candles and eight black candles for a net of six black candles.  During the past 50 bars, there have been 14 white candles and 36 black candles for a net of 22 black candles. Currently the MACD is bearish since it is trading below its signal line. The MACD crossed below its signal line two periods ago.  Since the MACD crossed its moving average, NSEASI's price has decreased 0.55 per cent, and has ranged from a high of 30,112.62 to a low of 29,445.78. The current value of the RSI and Stochastic Oscillator are 31.97 and 30.95 respectively.

The market transaction level in terms of volume and value of trades was up by 217 per cent and 61 per cent respectively compared to the previous week’s trading levels, this was attributed to special trading in the share of Equity Assurance, bringing the total volume and value traded for the week to 4.30 billion ordinary shares and N20.04 billion. These were exchanged in a higher number of trades of 19,809 in relative to 1.36 billion shares valued at N12.47 billion transacted in 17,450 deals recorded in the previous trading week.

During the week, the share price of Africa Prudential and Custodian & Allied were adjusted for dividend declared. Also half year earnings results of Access Bank and GTBank, just as that the  full year scorecard of PZ Cussons with a final dividend of 61 kobo.  

Market Outlook

As noted earlier, the challenging global macro-economic environment is putting pressure on European, China and US markets, following which investors in these market would be looking for countries that are recovery and yet having strong growth potentials to channel funds into.  In line with our forecast of mixed performance last week, which is likely  to continue this week with expected  mild improvement  on the monetary frontline as exchange rate is relatively becoming stable. Traders should cash in on the very short-term buy opportunities in the market as September is around the corner for unveiling of the long awaited Federal executive council that would run this economy.  

STOCKS TO WATCH

PZ, ACCESS BANK, LAFARGE AFRICA, FBNH, GTBANK, STANBIC ITBC, NB AND FIDELITY BANK

CORPORATE ACTIONS & RELEVANT DATES  FOR RECENT WEEKS
COMPANY	PERIOD		BONUS		REL.	CLOSURE	PAYMENT
	ENDED	DECLD	DECLD	REASON	DATE	DATE	DATE
PZ Cussons	May.31, 2015	N0.61		Final	8/21/2015	9/14/2015	9/30/2015
GTBank	Jun.30, 2015	N0.25		Interim	8/20/2015	9/8/2015	9/21/2015
Access Bank	Jun.30, 2015	N0.25		Interim	8/20/2015	9/3/2015	9/10/2015
Zenith Bank	Jun.30, 2015	N0.25		Interim	8/13/2015	8/24/2015	8/28/2015
Triple Gee	Mar.31, 2015	N0.04		Final	8/5/2015	9/25/2015	9/19/2015
Union Diagnostic	Jun.30, 2015	N0.2.5		Interim	8/6/2015	8/17/2015	10/2/2015
Northern Nigeria Flour Mills	Mar.31, 2015	N0.30		Final	8/6/2015	8/10/2015	9/14/2015
Cutix	Apr.30, 2015	N0.12		Final	8/5/2015	10/19/2015	11/16/2015
Scoa Nigeria	Dec.31, 2014	N0.03	nil	Final	8/5/2015	8/25/2015	9/24/2015
Flourmills	Mar.31, 2015	N2.10		Final	7/28/2015	8/10/2015	9/14/2015
Courtville Business	Jun.30, 2015	N0.04		Interim	7/28/2015	8/10/2015	8/31/2015
Africa Prudential Registrar	Jun.30, 2015	N0.17		Interim	7/29/2015	Later	Later
Consolidated Hallmark Ins	Jun.30, 2015	N0.02		Interim	7/30/2015	8/10/2015	8/27/2015
custodia & Allied Ins	Jun.30, 2015	N0.06		Interim	7/31/2015	8/17/2015	9/15/2015
AXA Mansard Insuarnce	Jun.30, 2015	N0.03	nil	Interim	7/31/2015	10/14/2015	10/26/2015
Redstar	Mar.31, 2015	N0.35		Final	7/28/2015	8/5/2015	9/14/2015
Honey Well Flourmill	Mar.31, 2015	N0.05		Final	7/28/2015	9/14/2015	9/25/2015