MARKET UPDATE FOR SEPTEMBER 6, 2017

INVESTORS DIGEST ECONOMIC DATA IMPACT ON STOCKS, AMIDST WAIT FOR BUDGET 2017 IMPLEMENTATION

Nigeria stock market rebounded at the end of midweek’s trading session, with the benchmark index in a positive come-back session amidst continued volatility. The market gapped up in the opening hours, but came down pretty hard, held support at 35,326.19 basis points, before doing a nice come-back by the afternoon, taking the index to intraday high of 35,745.70 and low of 35,348.94, recording a 205.15-point rally. In the last minutes of trading, the market lost a big chunk of the gains but still managed to close the day positive. 

The improvement in volume traded however signals a gradual increase in demand for stocks again after five consecutive days of selloff that propelled the pullback before Wednesday’s reversal despite the slight weakness in market breadth at the end the session.  

With the improvement in buying pressure of 65%, to support the up market as revealed by the volume traded index of 0.87, while selling volume was 35% of the day’s total transaction, it does appear investors are taking advantage of the correction and the emerging positive economic data to position in some stocks, which are being considered vis-à-vis the strong Q2 numbers of listed companies and the few full-year numbers that are also impressive. There is also the factoring in of hopes that the Nigerian government would urgently change its approach to economic management to ensure that the nation’s GDP is enhance, given that the 0.55% growth in 2017 Q2 is fragile, particularly by fixing critical road and rail infrastructure across the country.

The Muhammadu Buhari government needs to ride on the momentum of the relatively stable exchange rate, as well as the seeming peace in the Niger Delta that had impacted positively on the crude oil production output of 2million barrels per day. The increased output contributed substantially to the Q2 oil GDP as a result of relatively high price of the commodity at the international market that had influenced Nigeria’s external reserves positively, while supporting the nation’s positive economic outlook and the likelihood that it would attract more forex inflow if the Central Bank of Nigeria (CBN) continues to sustain its intervention as promised and is able to achieve a single exchange rate. 

Meanwhile, the composite index NSEASI gained 205.15 basis points on Wednesday to close at 35,609.07 point, from the 35,403.92 points opening level which represented 0.58% growth on a higher volume traded, when compared to previous session. Similarly, market capitalisation recovered by N70.71bn to close at N12.27tr, from Tuesday’s N12.2tr, representing a 0.58% value gain to halt the losing streak in investors’ portfolios.

The upturn in the share price of medium and high cap stocks during the session impacted positively to boost the ASI’s year-to-date returns to 32.50%, just as market capitalisation gains stood at N3.03tr within the period, 32.97% above the year’s opening value.

Market breadth for the day was slightly negative as the number of decliners outnumbered advancers in the ratio of 23:22 on a relatively low volume of trades to halt the five-day bear transition.

Market activities in terms of volume and value were up by 22.52% and 13.60% respectively to 281.34m shares as against previous day’s 230.03,m units valued  at N5.42bn, as against the N4.77bn recorded in the previous session.

Transaction in the shares of Guaranty Trust Bank, Access Bank, FBNH, Fidelity Bank and Sterling Bank topped the volume chart.

At the close of the day’s trading session, Guinness Nigeria topped the advancers’ log, gaining 10.24% respectively to close at N87.39, as investors reacted positively to its full-year audited result released during the day, which indicated a return to profit, following which the directors offered 64 kobo dividend per share (READ). It was followed by Redstar Express with a 9.82% notch at N4.81 per share, on market sentiments and strong Q1 numbers.

On the flipside, PZ lost 4.98% to close at N25.94 on a day it released its audited full year numbers, with profit rising by 73.1% and its board recommended a 50 kobo dividend (READ). Morison Industries shed 4.88% to close at N0.78 per unit on market forces despite its proposed primary activity. 

TODAY’S OUTLOOK

As trading opens this morning, volatility is likely to continue amidst profit booking and repositioning in expectation that the positive Q2 GDP will drive optimism in equity investment ahead of Q3 earnings season and year end, as we expect the government to review its 2017 budget implementation strategy and some fiscal policies that will support the monetary authorities to sustain the ongoing economic recovery to make real growth a reality.

However, investors need not panic if they take position based on strong numbers and future prospects of any stock as the news of exits from economic recession is a plus for 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 down amidst improving economic and market fundamentals. It is time to use your technical tools to take decision by knowing the support and resistant level to reposition or exit any position.

Meanwhile, 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.

Get your home study pack today and ride with the current recovery on Nigeria’s stock market and economy. By investing and trading knowledgeable

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MR. OMORDION AMBROSE

CHIEF RESEARCH OFFICER

INVESTDATA CONSULTING LIMITED

ambroseconsultants@yahoo.com

Tel: 08028164085, 08032055467