MARKET UPDATE FOR THE WEEK AND OUTLOOK FOR APRIL 24-28
Nigeria’s stock market indices continued
their downtrend for the second consecutive week on the back of a mixed first
quarter earnings reporting season as numbers emanating from some companies are
mixed. It must be noted that some of the results beat market expectations,
while others came flat and even below market estimate which made the week trading
highly volatile, besides the high number of companies whose share prices were
adjusted for dividend payment within the week, contributing to the market
closing lower.
The continued appreciation of the Naira
as Central Bank of Nigeria (CBN)makes the US Dollar available in the forex
market to meet different categories of demand and boost productivity, while
encouraging inflow of investment. There is also the acknowledgement by foreign
investors of the Federal Government’s Economic Recovery Growth Plan (ERGP)
which requires the total support of all government if it is to succeed and positively
impact ordinary Nigerians on the street.
This implementation of the plan as desired also requires that National Assembly
should hasten the passage of the 2017 Appropriation Bill to enable the nation’s
economic managers hit the road running to complement the CBN’s ongoing
efforts.
Many investors and businessmen in
Nigeria are concerned about the low liquidity in the market and the economy resulting
from delay in the 2017 Budget passage, despite the fact that billons and
trillions of Naira is being recovered by the government in some of the most
unlikely places thinkable. This low liquidity is gradually militating against
the confidence seemingly being rekindled among Nigerians on the economy.
Meanwhile, last week, the composite NSE
All-Share Index shed 320.64 points to close the week at 25,189.37 points, from
an opening figure of 25,510.01 points, representing a 1.26% decline on a low volume
of trade, compared to previous week’s level. The volume index of total
transactions for the week was 0.72; buying position, 4%, while selling volume
was 96% to continue the second week of down market.In the same vain, market capitalisation for the period closed lower at N8.73tr,
from an opening value of N8.83tr, representing a 1.26% loss of value.
The week’s advancers table was dominated by low and medium cap stocks as
investors focus on targeting growth stocks in expectation of their Q1 results
and seeming economic recovery.
Decline of stock prices during the week further pushed the
NSEASI's year-to-date negative position to 6.27%, just as the loss in market capitalisation increased to N518.74bn,
representing a 6.02% decline from the year’s opening value.
Market breadth for the week was negative and down as the number of
decliners outpaced advancers in the ratio of 31:24on low volume of trades that
were bearish, owing to lean demand for stocks. This is coming at a time when
more companies announcing a delay in the release their Q1 results, thereby
becoming a source of serious concern for investors who suspect that numbers which
would eventually emanate from such companies may be weak. Even more worrisome
is the fact that no bank has yet made its first quarter earnings report available
to the market, just five trading days before the 30-day deadline granted under
the same post-listing rule of the NSE. This, indeed, is a cause for serious
concern for market stakeholders, because it involves an industry generally
perceived as most compliant of the post-listing rules, whether in terms of
their quarter or full-year audited filings.
International
markets were mixed over the past week as the rebounding oil price and rising political
risk from North Korea, with China and Russia, two permanent members of the
United Nations Security Council gearing up for face-offs, thereby becoming a
major source of concern for investors at this critical time.
Japan’s Nikkei, Germany‘s DAX and major US indexes were up last
week, while Britain’s FTSE 100 was down over the same period. US market indices
ended the week on a positive note after a volatile period of trading
characterized by political risk and uncertainty. While industrial production
was disappointing early in the week, existing home sales surged by 4.4% to
their best rate since February 2007 with median prices rising by 3.6%. All
these played into the market movement as U.S President Donald Trump struggles
to implement his promised reforms during his electioneering campaign.
In Europe, despite the fear of elections holding in France, the
zone’s economy appears to be gaining momentum after IHS markets flash PMI
climbed to 56.7, its highest levels since April 2011.UK’s exit of the Euro Zone
has not considerably affected the region economic activities.
In Asia, investors’ cautious trading over the trouble brewing in
North Korea as China and Russia warm up for problems saying there may be no winner
at the end of the day. These political risks are likely to continue to weigh down
the markets.
Back home, the benchmark index opened the week on a negative note,
losing 1.29%, which was reversed in the
following trading session with 0.47%
gain and was short-lived with a loss of 0.19%
on Thursday which was sustained in the last trading session of the week with lost of 0.35%
to bringing the week’s cumulative loss
to 1.26% on a weak demand for stocks irrespective of the Q1 earnings reporting season.
The composite index and all sectoral indices for the period were
in the red, except for NSE Pension, NSE Oil/Gas and NSEAsem that were in the
green to close the week.
The week’s total transaction, measured by aggregate volume and
value declined by 24.64% and 1.99% respectively to 896.75m shares from 1.19bnshares
worth N5.92bn, as against N6.04bn in the previous week.
During the week, the share prices of Total Nigeria,
Unilever, Custodian & Allied Insurance, Fidelity Bank, Pharm Deko and
Nascon Allied Industries were adjusted for dividend. Meanwhile, Unilever,
Nigeria Breweries, Africa Prudential, United Capital, Trans nationwide Express
and Secure Electronic Technology made available their Q1 results to the
investing public.
Transcorp and Africa Prudential led the advancers’
log, gaining 22.88% and 9.70% respectively to close at N0.97 and N2.60, driven
by low price attraction, while the flip side was topped by Fidelity Bank and 7-Up,
which suffered 20.59% and 14.25% slide to close at N0.81 and N89.95 each
respectively.
Market Outlook
The market this week is likely to look up as more Q1 financials hit
the market with some surprises and disappointments.
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