MARKET UPDATE FOR MAY 23, 2017
CAUTIOUS TRADING STILL, AS INVESTORS, TRADERS DIGEST EMERGING ECONOMIC DATA IN NIGERIA
Trading activities on the floor of the
Nigerian Stock Exchange on Tuesday closed marginally higher to reverse previous
day’s down market, even as the outcome of the Central Bank of Nigeria’s
Monetary Policy Committee(MPC)follow general expectations that all rates be
held unchanged. It was a day also that the National Bureau of Statistics (NBS) released
the first quarter GDP 2017 figures showing that although the economy remains in
recession technically, contracting by 0.53%, the nation is almost out of the
woods, considering that in the 2016 Q4 Nigeria’s GDP declined by 1.72%. As we
have mentioned in update of Monday, the 2016 Q1 GDP gave a hint that the the
nation’s economy was on the road to recession, sliding into negative 0.34% after
an economic slowdown in the second half of 2015. The GDP figures show that the
economy is indeed recovery on policy shift of CBN concerning the foreign
exchange market as it seeks to solve the shortage of dollar by intervening to
boost the supply side. This, we note, has impacted on the economy, while expecting
that government would complement these efforts through it fiscal policy instruments,
as well as assent without further delay and faithful implementation of the 2017
budget. These would effectively drive its Economic Recovery and Growth Plan (ERGP)
for the good of Nigeria and Nigerians in the short, medium to long-term.
Expectations when the market opens this
morning, is that traders and investors must have started digesting the data
churned out from the NBS as well as the CBN and all other sources, especially as
they affect Nigeria’s economic well-being and prosperity. These interpretations
would play out in the form of movement in share prices of stocks on the
exchange.
Oil prices continue to climb, making it the
fifth consecutive day of growth, closing at $51.50 per barrel, 18% higher than the lows of just
18 days ago and Nigeria’s budget benchmark of $45 per barrel, while daily oil
production output is 1.83million barrels per day, according to the latest data
by the NBS. It is expected that based on the relative peace in the Niger Delta
and the exemption granted Nigeria by the Organisation of Petroleum Exporting
Countries (OPEC) from production cut since last November, the nation’s output
would not only surpass the 1.83m bpd level, but hit and go above the 2.2mbpd
quota soon. It must be noted that the price of crude oil hasn't been able to
muster much of a run, as it is stuck in the $43 to $55 range.
OPEC has scheduled a meeting for Thursday,
where expectations have been set for an extension of the cuts, to run through
March of next year.
Also, remember the recent meeting held
by the two largest oil producers-Saudi Arabia and Russia where agreed to do
"whatever it takes" to cut supply and in the process drive oil prices
higher, at a time the International Monetary Fund (IMF) says Saudi Arabia needs
$83pb of oil to balance its budget. Both nations appear to be working on achieving
the target, which therefore suggests that oil price would likely hit the $80
mark again around mid-2018, which would be a plus for Nigeria foreign reserves
and economy.
Meanwhile,
the composite All-Share index on Tuesday gained 15.00 basis points to close at
28,093.30 points, from an opening figure of 28,078.30 points, representing a
0.05% growth on a slightly above average traded volume of the market which was
marginally higher, when compared to previous day’s volume of transaction. Volume
traded index was 0.65, buying position was 28%, while selling volume was 72% of
the total volume for the day. Similarly market capitalisation rose by a seemingly
flat N5.19bnto close at N9.71tr from an opening value of N9.71tr, representing a
0.05% gain in value.
Value
gained in the shares of Ecobank Transnational Incorporated (ETI), Nestle, Nigerian
Breweries, PZ Cussons,Guaranty, FBNHoldings and Zenith Bank impacted the
All-Share index marginally to boost year-to-date gain position to 4.53%, while
market capitalisation for same period stood at N465.09 billion, representing
5.02% above the year’s opening value.
Market
breadth for the day was positive as the number of advancers outpaced decliners
in the ratio of 23:18 on average volume of trade to reverse Monday’s down
market
Market
activities for the day in terms of volume and value were mixed as volume was
marginally up by 2.22% to 212.68m shares
from previous day’s 208.08m shares,while value fell by 41.71% to N2.18bn from
the previous day’s N3.74bn.
Trades
in the shares of FBNH, DIAMOND BANK, FIDELITY BANK, GURANTY, and ZENITH BANK topped
the activity chart as most traded equities by volume.
The
All-Share index and all sectoral indices were mixed to close higher, except the
NSE Banking, NSE Industrial goods, NSE Pension, NSE Premium and NSE Oil/Gas
that were in red, while NSE Asem closed flat.
At
the close of Tuesday’s trading session, UACN Property topped the advancers’ log,
with its share price gaining 9.41% to close at N1.86 purely on market forces
and expectation of government policy on housing and injection of fresh funds.
It was followed by Fidson Healthcare’s8.89% gain to close at N1.96per share on hope
of likely merger and/or acquisition to boost bottom line.
On
the flipside, Dangote Flourmill led the decliners’ log, dropping 4.84% to close
at N4.13 on profit taking activities by discerning investors; Learn Africa followed
with a 4.71% price decline to close at N0.81 each on market forces.
As
market opens this morning, expect mixed action of profit taking and
repositioning in value stocks to continue, which means investors should not
panic if they take position based on strong numbers and future prospects of any
stock.
Again,
we advise that investors allow numbers to guide their decisions to reposition
for the rest of the year’s trading activities, especially now that prices of
stocks are oscillating, if the numbers will support the price reversal.
It
is time to use your technical tools to take decision by knowing the support and
resistant level to reposition or exit any position.
Once
more, at the risk of repeating oneself, we must reiterate that industry
potential is very important when picking a stock, because there are factors
that are sector-specific and would naturally impact positively or negatively on
companies operating within such an industry especially now that the economy is
recovery.
Invest
wisely and sign up for investdata buy & sell signal setup, for more details log onto our websites @ www.investdata.com.ng
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