MARKET UPDATE FOR JULY 3, 2017

NSE INDICATORS STRUGGLE AMIDST MIXED PERFORMANCE, EXPECTED Q2 NUMBERS

The first half of the year ended last Friday.On the Nigerian Stock Exchange (NSE), the banking sector took the lead in terms of market performance, with its index gaining 45.08%,almost double the 23.23% growth recorded by the composite index NSE All-Share index.

The second half of 2017 kicked off on a negative note at the end of Monday’s volatile trading session, beginning with the benchmark index inching up in the early trading hours before gapping down at mid-day to close below the 33,000 psychological line on a low volume of trade.

The day’s trading volume index stood at 0.34 on a buying position of 6%, while selling was 94% of the total volume traded. 

The continued positive economic data and information hitting the market is a factor to support the expected reverse from the two-day trend, particularlyas the nation’s manufacturing sector sustained its recovery in the Purchasing Managers’ Index (PMI) for June, which rose to a five-month high of 52.9, up from the May reading of 52.4. This reflected the impact of the Central Bank of Nigeria (CBN) intervention in the forex market through makingforeign exchange readily available at the import and export window. This also has supported the Naira’s stability and appreciation against other currencies of the world in both the official and parallel market windows.

All these are coming ahead of the Q2 earnings reporting season for which companies have started notifying the exchange of their closed period, preparatory to submitting their accounts, to avoid a situation where company insiders trade, based on price sensitive information available to them, while in the process influencing the market to their advantage. 

Another pointer to the nation’s improving economic health and wellbeing was the listing of six Nigerian banks among the top 1000 banks in the world and 25 in Africa,indicating their strong fundamentals and sustainability strength. This is in addition to expected implementation of the 2017 budget, which would boost macro-economic indices and the recovery. 

On the global terrain, stock markets around the world were mixed as oil price halted its eight-day up movement,while the US$ depreciated against other major currencies. The Bank of England, yesterday, assured of rate normalization soon, a situation that may be the beginning of another global tightening that would affect assets classification and movement in the world economies and markets.  

Meanwhile, Nigeria’s composite NSE All-Share index shed 347.65 basis points on Monday to close at 32,769.80 after opening at 33,117.48 points, representing a 1.05% decline on a low volume traded. Similarly, market capitalisation for the day went down by N120.23bn to N11.33tr from an opening value of N11.45tr, representing 1.05% value decline. 

The downturn in the share of prices of blue chips stocks impacted negatively on the All-Share index, reducing its year-to-date return to 21.94%, just as market capitalisation for the same period stood at N2.2tr, representing a 23.99% gain above the year’s opening value.

Market breadth for the day was negative as the number of decliners outpaced advancers in the ratio of 29:17 on a low volume of trade to continue Friday’s bear transition.  

Market activities in terms of volume and value were downby 53.06% and 54.70% respectively to 162.35mshares from previous day’s 345.86m and N1.52bn, compared tothe previous day’s of N3.35bn.

Transactions in the shares of ACCESS BANK, FIDELITY BANK, UBA, ZENITH BANK and TRANSCORP topped the volume chart to close the day’s trade.

At the end of trading, Honeywell Flour topped the advancers’ log with its share price gaining 9.66% to close at N1.93 each, on impressive Q4 numbers and expected Q1 earnings report. It was followed by PZ Cussons with 6.24% gain to close at N24.35per share, on market forces  ahead of it Q4 numbers.

On the flipside, May & Baker led the decliners’ log, after dropping 9.54% to close at N3.51 on profit taking, ahead of 7-Up’s9.53% to close at N78.21 each on the back of its unimpressive 2017 full-year numbers.

The management of Flourmills Nigeria Plc released its full year earnings reports with mixed performance as top line rose, while profit for the period declined to N8.2bn from N14.32 billion (READ STORY: http://investdata.com.ng/2017/07/update-flour-mills-net-profit-38-72-finance-cost-hits-n32-52bn/). Also during the day trading in the share price of Presco and Trans nation-wide Express were adjusted for the dividend.

TODAY’S OUTLOOK

As the market opens this morning, expect mixed performance as more company release their closed period ahead of making their Q2 earnings reports available to the market. Investors should not panic on the any pullbacks if they have taken position based on strong numbers and future prospects of any stock. But quickly bail out when your expectations are not met when the actual figure hit the market to cut loss.

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- 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:01-4724645, 08028164085