MARKET UPDATE FOR WEEK ENDED JUNE 23 AND OUTLOOK FOR JUNE 28-30, 2017

MIXED TRADING WEEK, AMIDST HOPE FOR BUDGET 2017, PORTFOLIO REBALANCING

Nigeria’s stock market moved lower during the past week as selling pressure increased on the heels of profit taking as many stocks were selling above their 52-week highs. At the same time, there are the effects of negative reactions of investors to none readmission of Nigeria into the Morgan Stanley Capital International (MSCI) Frontier Index’s in its June review. China was admitted into emerging market index, while  Nigeria and Argentina were put under consideration for a ”Standalone.” Nigeria's re-classification was postponed to November in the midst of the unstable global oil price and the danger of increased non-performing bank loans, where Etisalat, the country's fourth largest communication companies defaults in repaying its estimated N534.1bn US$ denominated loan from a consortium of Nigeria banks. Graciously, the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC), on Friday in a statement noted ongoing plans to intervene in the face off, so as to save jobs, while the company and its creditor banks discuss ways to resolve the issue and rekindle the investing public's confidence. This is just as positive and improving economic data continue to confirm recovery of the economy.

Bearish sentiments dominated the market after the first two trading sessions of last week before the pullback lingered till the Friday. The volume index for the period was 1.65 as buying position was 1%, while selling volume was 99% of the total transaction to reveal the level of selling situation in the market as investors move to hold cash and watch for the next trend. This is especially as month end window dressing and statutory date for releasing march year-end account are around the corner.

Meanwhile, the benchmark Index for the week shed 1,688.42 points to close at 32,122.14 points, from an opening figure of 33,810.56 points, representing a 4.99% decline on a high volume of transactions. The market pulled back to close lower after it had broken out the psychological line of 34,000 within the period under review.

Similarly, market capitalisation for the week closed lower at N11.11tr from an opening value of N11.6tr, representing a 4.99% after hitting high of N11.89tr.

The advancers’ table for the week was dominated by low and medium cap stocks as investors and traders continued to book profit from banking and high cap stocks that had rallied recently, thereby creating opportunities for repositioning as earnings reporting season for Q2 kick off in July while the remaining march accounts are expected in the market after the holidays.

Losses suffered by listed companies during the period reduced the SEASI’s year-to-date return to 19.53%, just as that of market capitalisation dropped to N2.01tr, representing 20.49% gain from the year’s opening value.

Market breadth for the period was negative with the number of decliners widening and outweighing that of advancers in the ratio of 52:23 on a high volume of trades to reflect selling pressure from investors and traders.

Stock markets around the world were mixed over the past week, closing higher on positive economic data, as oil price suffered further decline to retrace up on falling US Dollar.

Germany‘s DAX and Britain’s FTSE 100 were down, while Japan’s Nikkei and U.S market indexes were up for the week. TheU.S market indexes were driven by the rebounded Tech stocks after CEOs in the industry met with President Trump. In addition to the positive leading economic index that rose by 0.3% in the month of May to suggest that the U.S economy is still strong. There was also effects of the rebound of the  housing sector, especially with the 1.1% increase in the existing home sales to a higher than expected 5.62m, while jobless claims were little changed from its strong prior position.  

In Europe, IHS market’s June flash purchasing manager composite dipped to 55.7 in May, which is well above the 50 mark that would indicate a contraction. 

Investors have continued to worry about North Korea's continued test of nuclear missiles, which has become a concern to the U.S government and indeed, the rest of the world.

In Asia, China’s economy has been projected to grow by 6.7%, due to policy support, especially as the country's stock market continues to rise following its inclusion in the MSCI Frontier Index of emerging markets. Japan offered the first upbeat assessment of its economy since December with the visible sign of improvement.

Back home, the All-Share Index opened the week on a positive note, gaining  0.96%, which was sustained with Tuesday's 0.71% up market. There was reversal during mid-week’s trading on a bearish sentiment and profit taking, leading to a loss of 2.61%, linked to negative market reactions to the postponement of Nigeria's inclusion in the MSCI index. This continued on  Thursday and  Friday when the market lost 1.60% and 2.45% respectively  to bring the week’s total loss to 4.99% on selling position to halt four weeks bullish transition.

The All-Share index and other sectoral indexes for the period were down to close the week, except for the NSE ASeM, that was up 0.08%.

The week’s activities, measured by aggregate volume and value were down by 15.69% and 21.39% respectively to 2.31 billion shares, as against the 2.74bn units in the preceding week and N24.58bn and N32.04bn in the previous week.

During the week also, the share priceof Lasaco and Continental Reinsurance were adjusted for recommended dividends by their directors, while Conoil Plc announced a dividend of 310 kobo.

At the end of the week’s trading, Neimeth and Ashaka Cement topped the advancers log with a gain of 44.12% and 21.39% respectively to close at N0.98 and N17.08, driven by government's new policy of sourcing all drugs and vaccine locally before looking elsewhere. The flip side was topped by Trancorp and Jaiz Bank, which suffered 23.12% and 17.98% slide to close at N1.43 and N0.73 each respectively as a result of profit taking.

Market Outlook                   

The market is expected to be mixed in three trading days of the week as a result of the end of month trading account balancing by fund managers and market players. This is in addition to repositioning by traders ahead of the Q2 earnings season, amidst expectations that implementation of the 2017 budget would boost economy recovery. Also, is the expectation of more March year-end earnings reports in the market this week. 

Investors at this level of the market should position in stages in value stocks with high upside potentials, despite the current prices of stock on the exchange. 

Again, the time to combine company fundamental data and chart pattern for your trading and investing  decisions is now, to enable you know the support and the resistance levels.

Train yourself and study to know the new approach to adopt at this point and going forward,

To join us at the coming one day workshop by calling 08032055467 and 08111811223.

Also for our webinar every Friday 8pm to 9pm, WhatsApp group and get market updates, SMS web*name*email to 08124050850

Attention! Attention!! Attention!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Workshop on COMPREHENSIVE SHORT-TERM TRADING STRATGIES FOR REST OF THE YEAR & BEYOND

Sub Topics:

1. The Toolbox of Successful Traders & Technical Analysts- Mr Meshach Ukpoma, FX Analyst/Trader

2. Outlook and Implications of the 2017 Budget & Petroleum Industry Governance Bill (PIGB) on Nigeria’s Stock Market and Economy- Abiola Rasaq, Group Head Investor Relations, UBA

3. A Strategic Outlook; The Fusion of Fundamental & Technical Analysis- Ambrose Omordion, Chief Research Officer Investdata Consulting Ltd

4. Understanding Market Timing to Manage Risk, Using Technical Analysis - Mr. Abdul-Rasheed  Momoh, Head, Capital Markets, TRW Stockbrokers Limited

The workshop holds on:

DATE: 15 July 2017

TIME: 9.00am

VENUE: Ostra Hall & Hotel, Behind MKO Abiola Gardens, Opposite NNPC Gas Plant, CBD, Alausa, Ikeja. Lagos.

The fee is N20, 000 per participant. Payment made a week before the date of the event attracts 10% discount. Companies sending more than two representatives would enjoy a 15% discount.  Payment should be made into: Zenith Bank; Account Name: InvestData Consulting Limited; Account Number: 1013033032.

For more enquiries about the programme, please call 08032055467, 08179547605, and 08111811223  

MR. OMORDION AMBROSE

CHIEF RESEARCH OFFICER

INVESTDATA CONSULTING LIMITED

ambroseconsultants@yahoo.com

TEL: 08179547605, 08032055467