AUGUST MARKET ROUNDUP

TALE OF THREE-YEAR HIGH, VOLATILITY, CORRECTION, IMMINENT REVERSAL 

Trading on the Nigerian stock exchange (NSE) for the just concluded month of August was mixed as earlier predicted in our July round up to close lower as it halted five straight months of bullish run, after breaking out of the psychological level of 38,000 basis points. During the month, the NSE All Share index hit an intra-day high of 38,241.67 on August 14, after closing at 38,198.60 points

on Friday, August 11, 2017, representing a 42.14% return on investment on that date. On that date too, market capitalization closed at N13.17tr, representing a N4.01tr or 42.64% jump in investors’ worth.

During the month of August also, the NSE index tasted a low of 35,417.16, reflecting the heavy cash out by investors, which took back all of its earlier gains after attaining a three-year high during the month. The impressive Q2 numbers from the banking sector did not influence the market positively as the earnings and interim dividend have been factored into the prices of the banks that made Q2 audited numbers available following which sell-offs persisted to end the month negative but with improved market breadth on the last trading day of the month that signaled reversal of the market correction is imminent. 

The volatility seen in the second half of the month was despite the fact that positive factors supporting the market in the last six months remained intact, particularly the nation’s impressive foreign reserve pool. This is just as other macro-economic fundamentals continued to look up, helped by the continued intervention of the Central Bank of Nigeria (CBN) in the foreign exchange side of the inter-bank market, which had enjoyed sustained liquidity in the investors and importers window. This liquidity encouraged foreign investors and helped facilitate capital inflow into the stock market.  Although the August Purchasing Managers’ Index released by the CBN on Thursday showed that fell marginally to 53.6 point from its level in July, it nonetheless remained above the 50 points threshold that shows that was some growth in productivity during the month (READ).

The magnitude of losses suffered within the month dragged the NSE ASI into the red, with the market down for 10 trading sessions and up for 13, leading to a pull-back that resulted in a drop in the market’s year-to-date gain from 33.39% in July to 32.11%. Despite the drop, the index remained among the top performing emerging markets in the globe and Africa, amidst its myriads of challenges. 

It must be noted that companies on the NSE posted exceptional improvement in the Q2 numbers and the economic recovery, just as it remained attractive even as recent correction revealed the undervalued state of some stocks with high potential to rally.

Meanwhile, the composite Index for the month fell by a marginal 343.13 points to close at 35,504.62 from an opening figure of 35,847.72 which represented 0.96% decline over the period on a strong selling pressure that impacted on stock prices within the month.

The selling volume of total transactions for the month was 97%, while buying position was 3% to halt the five months of bullish transition,while volume index for the period was 1.04.  Market capitalisation for the month shed N120bn to close lower at N12.24tr, from an opening value of N12.35tr, representing a 0.96% value loss. The market’s mixed trending was due to profit taking and repositioning by traders.

Traded volume for the month was up by 3.80% to 6.83bn shares from 6.58bn in the preceding month.

Market breadth for the month was negative with decliners outweighing the advancers in the ratio of 42:35 to cut short the five months bull transition by pulling back on the last trading week of the period due to price correction.

NSE Consumer Good Index topped the sectoral performance chart for the period with 11.68% gain to outperform the general market benchmark index that closed in the negative. While the NSE Main board ranked second, a gaining 3.48%, whereas the NSE 50 and NSE 30 notched 0.66% and 0.15% respectively to occupy three and fourth positions.

On the other hand, NSE Gas/Oil was the worst performing indexes as it shed all of 11.37%. It was followed by the NSE Premium 7.78% decline, reflecting the high selling pressure on the shares of Zenith Bank, FBNHoldings and Dangote Cement. This was followed by the NSE Industrial, which dropped 4.69% to reveal investors’ wait-and-see attitude at a time capital intensive projects of government are yet to start impacting bottom, due to the delay in implementation of the 2017 budget. Other sectors that closed in the red during the month were: NSE Insurance, NSE Banking, and NSE Lotus with 2.47%, 1.27% and 0.46% respectively to reflect investors and traders movement in and out of the stocks in sectors.

Best Performing Stocks

The month’s best performing stocks were C & I Leasing which gained 33.33% of its opening price, as it galloped  on the strength of its quarterly earnings report that were released recently; followed by National Salt, which appreciated by 24.76%; while Dangote Flour Mills rose by 22.61% in the period under view; just as Nestle Nigeria chalked 21.55%. Other gainers on the table for the month included: PZ Cussons, 18.70%; NahcoAviance, 16.19%; Guinness, 16.06%; Livestock Feeds, 15.38%; and UBN, 14.50%; among others.

Best Performing Stocks in August
Securities	Sector	Open	Close	% Change
C & I Leasing	Services	0.75	1.00	33.33
National Salt	Consumer Goods	10.42	13.00	24.76
Dangote Flourmills	Consumer Goods	5.22	6.40	22.61
Nestle Nigeria	Consumer Goods	1003.70	1,220.00	21.55
PZ	Consumer Goods	23.00	27.30	18.70
Nahco	Services	2.78	3.23	16.19
Guinness  Nigeria	Consumer Goods	65.05	75.50	16.06
Livestock Feeds	Agribusiness	0.78	0.90	15.38
UBN	Financials	5.24	6.00	14.50
Dangote Sugar	Consumer Goods	11.97	13.50	12.78
International Brewery	Consumer Goods	33.13	37.00	11.68
Jaiz Bank	Financials	0.69	0.77	11.59
Linkage Assurance	Insurance	0.61	0.67	9.84
BocGas	Industrial Goods	3.28	3.60	9.76
ETI	Financials	16.50	18.00	9.09
Cutix	Industrial Goods	2.31	2.50	8.34

Source; NSE and Investdata Research

Worst Performing Stocks

Worst performing stocks for the period was led by Morison Industries, which lost 36.91%, as a result of sell-offs after the company recorded unimpressive numbers despite the proposed primary market activities. Double One Plc lost 34.74% as a result of its weak Q1 and Q2 numbers; followed by the 25.37%drop in the price of Nem Insurance; and Conoil,23.90% on the back of profit taking by traders.

Worst Performing Stocks in August  2017
Securities	Sector	Open	Close	% Change
Morison Industry	Healthcare	1.30	0.82	36.92
Double 11	Oil/Gas	253.00	165.11	34.74
NEM	Insurance	1.34	1.00	25.37
Conoil	Oil/Gas	36.40	27.70	23.90
Forte Oil	Oil/Gas	61.70	49.00	20.56
Okomu Oil	Agribusiness	80.03	65.64	17.98
Champion	ConsumerGoods	2.85	2.40	15.79
Oando	Oil/Gas	7.98	6.81	14.66
FCMB	Financial	1.25	1.07	14.40
Redstar Express	Services	5.10	4.38	12.40

Source: NSE &Investdata Research

Chart view of August market.

NSEASI MONTHLY TIME FRAME FOR AUGUST

NSE Index has been trending up as revealed by the index action to form a rising channel where the market closed within the channel after trying to breakout the upper line of the channel which has become the resistant and pullback immediately to create a new entering point for discerning investor.