VOLATILITY PERSISTS, AS INVESTORS THINK INTERIM DIVS, 2017 BUDGET, BANKING, FG’S AGRIC FOCUS

MARKET UPDATE FOR JUNE 14, 2017


Trading on the floor of the Nigerian Stock Exchange on Wednesday was volatile, opening with the index sliding down, before moving up to close higher due to the increasing demand for stocks thereby halting the two-day profit taking, especially in banking and petroleum stocks.

The day’s rebound was driven by interest in banking and agribusiness stocks, at a time investors continue to focus on maximizing returns on investment, while looking forward to the Federal Government’s implementation of the 2017 budget, especially the 30% of N7.44tr earmarked for capital projects, which would be paid to contractors through the banks. The government is also investing seriously in the agricultural sector as part of efforts to ensure food security in the country, while checking the food crisis in the insurgency plagued North-East Nigeria, where Acting President Yemi Osinbajo recently lead the Federal Government’s effort to distribute about 40,000 metric tonnes of food grains to an estimated 1.8m Internally Displaced Persons in the region on Thursday, June 7, 2017, under the quarterly Special Relief Intervention plan estimated to gulp about N8bn, depending on current prices of commodity prices.

Investors positive sentiments at the end of the mid-week trading was  revealed by  volume index of 1.53 with buying position of 99%, while selling volume was 1% of the total volume traded for the day. This is an indication of renewed optimism for expected Q2 numbers especially for financial sector where interim dividend is common. This is especially as the Q1 earnings of banks and insurance companies that pay interim dividend had revealed a high possibility of dividend payment at the end of half year. 

As investors expect positive economic data and implementation of the 2017 budget judiciously by following the ERGP agenda that will fasten the nation economic recovery and further boost  confidence that is driving the stock market and attracting foreign inflows.

Stock markets around the world were mixed as the Fed finally hiked rate at the end of its meeting on Wednesday, with oil price still sliding in the international market. This is likely to weaken the dollar as the move by Fed signals exit of monetary stimulus in the global economy and markets. The market awaitsthe outcome of other central banks’ meetings slated for this period to know the direction they are heading, if there will be unison or otherwise.

Meanwhile, the NSE All Share Index gained 456.55 basis points to close at 33,598.20, after opening at 33,141.85 points, representing a 1.38% growth on a huge volume traded. It was however higher when compared to previous day’s transaction level. Similarly Market capitalisation for the day went up by N157.8bn to close at N11.62tr, from an opening value of N11.46tr, representing 1.38% value gain in investors’ portfolios.

Upturn in the share prices of Oando, FBNH, Okomu Oil, Zenith Bank, Presco, Flourmills, Stanbic IBTC, Guaranty Trust Bank,UBA,Seplat, NB and Lafarge Africa impacted positively on the All-Share index’s year-to-date return to 25.02. Also, growth in market capitalisation for the same period stood at N2.37tr, representing a 25.65% appreciation above the year’s opening value.

Market breadth for the day was positive as the number of advancers outpaced decliners in the ratio of 36:22 on huge volume of trade to halt the two-day down market.  

Market transactions in terms of volume and value were up by 85.03% and 13.51% respectively to 759.05m shares from previous day’s 410.22m shares and N6.3bn from the previous day’s N5.55bn. Activities in the shares of FBNH, LASACO, ACCESS BANK, ZENITH BANK and TRANSCORP topped the volume chart to close the day’s trade.

At the end of trading, May & Baker topped the advancers’ log with its share price gaining 10.20% to close at N3.78 each, on continue impact of the Memorandum of Understanding (MoU) with the government to produce vaccine. It was followed by Ashaka Cement  with a 10.18% gain to close at N14.07 per share, on market forces as government drive on infrastructural will support bottom line in the future.

On the flipside, International Brewery led the decliners’ log, after dropping 4.80% to close at N28.56 on profit taking and weak full year earnings report, whileCutix  followed with 4.62% to close at N1.86 each on profit taking.

TODAY’S OUTLOOK

As the market opens this morning, expect mixed action of profit taking may sustain volatility, amidst profit taking and repositioning in value stocks, especially as investors await the release of May inflation figures today. All things considered, investors should not panic on the recurrent pullbacks if they have taken 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 looking up ahead of recovery economic fundamentals, if the numbers will support the price reversal or continuation.

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 recovering. For stocks that should be on your shopping list to buy in this up market or pullback sign up for investdata buy & sell signal setup by calling 08032055467.

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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- AbiolaRasaq, 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: 24 June 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:01-4724645, 08028164085