MARKET UPDATE FOR APRIL 10

 

INVESTORS POSITION FOR Q1 EARNINGS REPORT, GUIDED BY FULL-YEAR NUMBERS

The stock market indices on Monday were mixed, closing lower in continuation of its two-trading sessions of bear run and profit taking.  

Volume traded was up, compared to the previous day’s figure, even while it was however below the market’s traded average.  Market sentiment for today was bearish as players take their time to interpret, analyze and digest the 2016 full-year scorecards released by various companies in anticipation of their first quarter earnings reports to re-position their portfolio, especially now that it seems the economy is on the path of recovery. 

Looking at the corporate results so far, there have been surprises and disappointments as expected, but the numbers were mixed and weak for the year. Also, the earnings reports were not as bad as expected, considering the fact that the economy remained in recession for all of last year, resulting in serious cost-cutting measures to remain in business, leading to an increased number of jobless citizens. 

The result of this has also included low economic output as cost of doing business remained high, but it appears the government is gradually preparing to address some of the underlying issues, but there is need to be fast, just as there is need for a change in leadership and implementation styles, if the recently launched Economic Recovery and Growth Plan (ERGP) will become realty. We have had enough of talk-shops already, it is now time to walk the talk and reduce the pains and hopelessness on Nigerian streets.  

The most needed collaboration between the fiscal and monetary authorities is for the actions and decisions of each to support this recovery. Already, the CBN has been intervening in the foreign Exchange market in recent times to provide liquidity and close the gap between inter-bank and black market rates, a decision we acknowledge is good, while calling for more actions or steps to sustain the progress made so far. The improved exchange rate of the Naira against global currencies in the black market would help to stamp out the high level imported inflation.  

The global stock markets closed mostly lower despite the continued recovery of the oil price as investors try to digest impacts of the recent U.S missile strike on Syria, which has attracted global attention, following which the G-7 Foreign Ministers began a two-day meeting Monday, with Europe and Japan seeking clarity from the U.S. on an array of issues, most notably Syria. Italy is hoping for a final communiqué that could reinforce the UN’s efforts to end the six-year conflict in the Middle East country. 

In France, the official campaign for the Presidential election has started, with French citizens expected to vote in the first round of the two-stage process on April 23, before electing a new Premier on May 7. 

Elsewhere, Federal Reserve President James Bullard reaffirmed his view that the U.S. is in a low growth. The low productivity regime is likely to last for the foreseeable future and therefore the central bank did not need to rush interest rate hikes.

Speaking in Australia, Bullard suggested any fiscal or tax changes imposed by U.S. President Donald Trump would likely only impact the U.S. economic outlook next year.

Meanwhile, the composite NSE All Share Index shed 120.15 basis points to close at 25,626.37, from an opening figure of 25,746.52, representing a 0.47% decline on improved volume traded, when compared to the previous day’s figures. 

Similarly, market capitalisation for the day was lower by N41.57 billion to close at N8.87trillion, from an opening value of N8.91trillion, representing 0.47% lost in value by investors.            

Value depreciation recorded by the medium and high cap stocks for the day impacted the All-Share index’s year-to-date negative position to 4.61%, while market capitalisation adjusted to N376.8bn, representing 4.20% loss YTD, from the year’s opening value.

Market breadth for the day was negative as the number of decliners outpaced advancers in the ratio of 22:10 to continue the bear transition. Market activity in volume and value were mixed, rising by 77.73% to 191.84m shares from previous day’s 107.94m shares and 35.58% to N584.72m from the previous N907.73m.  

The volume of transaction was driven by shares of Staco Insurance, Dangote Sugar, FCMB Holdings, FBN Holdings and C&I as most traded equities. 

The NSE All-Share index and all sectoral indices were lower, except NSE Oil/Gas that rose marginally by 0.04%, while the NSE ASeM was flat to close the day’s trading.

During the session, Dangote Sugar’s share price was adjusted for dividend of 60 kobo, while Ashaka Cement released its 2016 full-year financials to the market. 

Fidelity Bnak led the advancers log with 9.52% to close at N0.92, driven by its high Dividend Yield, followed Total Nigeria with 4.11% to close at N270; while Oando topped the decliners’ log, by 4.75% to close at N5.62, ahead of Unity Bank with 4.65% to close at N0.61. 

We advise that investors allow numbers to guide their decisions to re-position for Q2 trading as the first quarter earnings reporting season is just kicking off. Industry potential is very important when picking a particular company, because there are things that are sector-wide and would naturally impact positively or negatively on companies operating within such an industry.