MARKET UPDATE FOR AUGUST 29, 2017

INDICATORS SLIDE, DESPITE ENHANCED FUNDAMENTALS, RESULTS, AS INVESTORS AWAIT FISCAL EFFORTS

Nigeria’s equity market on Tuesday continued its volatility, closing south on a significantly low volume that was below its average traded volume, reflecting investors’ wait-and-see attitude as pullback continued on a selloff ahead of the long holiday declared for Friday and Monday, as well as to pick bills associated with the season. The NSE indicators gapped down sharply after a bashing that started in the early hours into midday, breaking down the support and psychological line of 36,000 to 35,747.97 before bouncing back in the afternoon to reduce the day’s loss, closing slightly above the 36,000 mark. It looked like, perhaps, an intra-day bottom was in view, but important resistance could not be taken out, and consolidated its down trend with Wave 3 corrective motive as it equally formed a double bottom that indicates a reversal.

The continued downward trend of the market, irrespective of the impressive quarterly earnings reports laced with interim dividends is indeed of grave concern to investors, given that the market had failed to react to these strong numbers, including the robust three-digit growth in half-year net profit reported by Stanbic IBTC released in the opening hours of Tuesday with 60 kobo dividend. Other financials released on Tuesday to the Nigerian Stock Exchange (NSE) were Fidelity Bank’s audited half-year, Cutix and Grelf Nigeria, all of which were also above market expectation.

Buying pressure stood at 73%, despite the down market as revealed by the volume traded index of 0.44, while selling volume was 27% of the day’s total transaction, even as market breadth remained negative.

Income investors interested in interim dividend should however take advantage of the lingering pullback given Wednesday is the last day to qualify for UBA’s 20 kobo dividend, as well as the medium to long-term, given the planned opening of a UK arm as announced by the Group Chief Executive, Kennedy Uzoka during a conference call also on Tuesday (READ). 

Stock markets around the world were mixed to closed lower amidst the ongoing tension arising from the twin trouble arising from Hurricane Harvey currently ravaging the U.S state of Texas and the missile fired by recalcitrant North Korea, flying over Japan’s northern island of Hokkaido, before landing in the Pacific Ocean. Despite global outrage, Pyongyang insists was a prelude to more military operations directed at the American territory of Guam. The missile launch already condemned by global leaders, including the United Nations and the disaster in Houston and Corpus Christi, both in Texas, weighed down the markets as another around of panic resumed in the face of oil price pulling back on gasoline rise

Meanwhile, Nigeria’s Composite NSE ASI shed 151.38 basis points on Tuesday to close at 36,165.93 point, compared to the 36,317.31 points opening level, representing a 0.42% decline on a low volume traded, when compared to previous day. Similarly, market capitalisation for day fell by N52.71bn to close at N12.47tr, from an opening value of N12.52tr, representing a 0.42% depreciation in investors position.

The value loss suffered by highly capitalized stocks impacted negatively on the ASI’s year-to-date returns, reducing it to 34.57%, just as market capitalisation dropped to N3.22tr within the period, which left it at 34.81% above the year’s opening value.

Market breadth for the day remained negative as decliners outpaced advancers in the ratio of 25:14 on a low volume of trades to continue its two day bear market in the week.

Transactions in terms of volume and value were down by 58.50% and 49.33% respectively to 144.45m shares, worth N1.51bn, as against previous day’s 348.11m units, valued at N2.98bn.

Also, trading in the shares of Fidelity Bank, Zenith Bank, FCMB, Access Bank and Transcorp topped the volume chart.

At the close of the day’s trading session, Champion Brewery topped the advancers’ log, gaining 6.34% to close at N2.50 each on market forces, followed by Neimeth with a 4.82% notch at N0.87 per share, also on the activities of market forces.

On the flipside, Double One and Jaiz Bank lost 5.00% to close at N173.79 and N0.76 per share respectively on profit taking and market forces, ahead of Okomu Oil Palm’s 4.99%  to close at N65.64 per unit also on profit booking. 

TODAY’S OUTLOOK

Being few days to month end, the  volatility will continue amidst profit taking and repositioning in interim dividend paying stocks ahead of book closing by taking advantage of pullback, even as we expect improved efforts from fiscal and monetary authorities to sustain the ongoing  economic recovery.  Moreso, Nigeria’s second quarter GDP figures are being awaited from the Nigeria’s National Bureau of Statistics (NBS) to officially confirm her economic status and direction.

However, investors need not panic if they take position based on strong numbers and future prospects of any stock since there is no bad news in the market.

Again, we advise that investors allow numbers to guide their decisions while repositioning for the rest of the year’s trading activities, especially now that prices of stocks are looking up ahead of the improving economic fundamentals, amidst the wait for the Federal Government to complement initiatives of the monetary authorities needed to quicken Nigeria's economic recovery. It is time to use your technical tools to take decision by knowing the support and resistant level to reposition or exit any position.

Be reminded once more that industry potential, market timing are 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. Market is in phases know it in order to manage your trading and investing risk. For stocks that should be on your shopping list to buy in this oscillating market or pullbacks sign up to INVESTDATA BUY AND SELL signal setup by calling 08032055467.

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MR. OMORDION AMBROSE

CHIEF RESEARCH OFFICER

INVESTDATA CONSULTING LIMITED

ambroseconsultants@yahoo.com

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