SEPTEMBER MARKET ROUNDUP 2017

NSE INDEX CLOSES RED, AMIDST HOPE FOR YEAR-END POSITIONING BY SPECULATORS, INVESTORS

The month of September and third quarter of the year 2017 came to an end last Friday with the Nigerian Stock Exchange (NSE) recording a marginal decline of 0.18%, making the second consecutive month that the market is closing in red, as bullish sentiments slowed down due to profit booking, added to the delayed execution of policies that could have sustained robust economic recovery. This is not unconnected with the poor implementation of the capital component of the 2017 budget that will drive the Economic Recovery & Growth Plan, even as President Muhammadu Buhari administration, on Sunday, listed N1.2tr expenditure on capital/infrastructure projects nationwide, which it described as a milestone in the nation’s history, as one of the 57 achievements so far, just as the “effective implementation of the Treasury Single Account, and increasing government revenue by over N3tr, as well as entrenching transparency and accountability.”
The decline suffered by Nigeria’s stock market should not come as a surprise to many market players, given that the month is known for key expenses by investors who traditionally have to pay for school fees for their children and wards in August/September. This situation is worse for those with children schooling abroad, as there is pressure to sell even at a loss to meet the ever rising demands. Add this to the fact that because September is not known for submission of quarterly or full-year earnings score-cards, there is less of speculating activities in the month.
For the just concluded third quarter however and year-to-date, the market still managed to close positive, chalking 7.01% and 31.87% respectively to maintain a bullish posture that gives insight that the year 2017 is likely to end in the green as INVESTDATA projected in our Invest 2017 traders and investors workshop organized on December 3, 2016.

Notably, sectors of the market that performed at their peak on quarter and year-to-date basis mostly underperformed in September, with only the financial services sectors of insurance and banking recording marginal growth.

During the month, the composite index NSEASI shed 64.64 basis point to close at 35,439.98 from an opening figure of 35,504.62 which represented a 0.18% decline after it had touched an intra-month high of 36,175.20 and a low of 34,653.22 to remain above 35,000 psychological level, after breaking down various times during the trading sessions of the period.  Market capitalisation for the month also lost N20bn to close lower at N12.22tr, from an opening value of N12.24tr, representing a 0.16% value loss.

The mixed performance recorded in September resulted from cautious trading that dominated selling position as investors took profit to meet growing needs, while positive economic data released within the month by the Central Bank of Nigeria (CBN) and National Bureau of Statistics (NBS) did not significantly impact the market as these data came in with fragile growth. This was especially the case with the August inflation that only managed to decline by just 0.04 points to 16.01% from July 16.05%; the Q2 GDP figure that came in positive at 0.55%, marking the nation’s exit from recession after five consecutive quarters of contraction that began in the first quarter 2016. Also, Nigeria’s Purchasing Manager index (PMI) expanded to 55.3 points in September from 53.6 points in August.

The volatility rate for the period was high on low volume traded to reflect the cautious trading and mixed sentiment that took over the market, leading to 10 straight trading sessions of  down market and 9 sessions of bull-run. Traded volume for the month was down by 41.58% to 3.99bn shares from 6.83bn shares in the preceding month.

Market breadth for the month was negative with decliners outnumbering the advancers in the ratio of 52:25 to continue a two-month bear transition with declining magnitude in loses as stock prices adjusted up slightly in the last three trading sessions of the month in an apparent market reaction to the decision of the CBN’s Monetary Policy Committee (MPC) meeting to hold all rates, which members said had become necessary to observe unfolding developments in the polity. The buying volume of total transactions for the month was 52%, while selling position was 48% to reverse the selling pressure in August, while volume index for the period was 0.63.  

Topping the sectoral index movement table for the period was the NSE Premium, which chalked 3.32%, thereby outperforming the overall market All Share index that closed in the negative of 0.18%. It was followed by the NSE Insurance, which gained 1.59%, whereas the NSE Lotus and NSE Banking could only notch 0.27% and 0.11% respectively to occupy third and fourth positions.

On the other hand, the NSE Gas/Oil that had suffered losses year and quarter to date was the worst performing index for the month under review as it shed 6.05%; followed by the NSE Industrial’s 3.30% decline, reflecting profit taking by investors, many of who preferred to stand on the sidelines as they watched for government’s implementation of its infrastructural development talk. The NSE Consumers index was next, dropping 2.65% as  investors cashed out profit from the sector’s recent rally due to impressive numbers from companies listed in that industry. Other sectors that decline within the period were: NSE Main Board, NSE 30, NSE Pension and NSE ASeM with 2.16%, 0.95%, 0.59% and 0.35% respectively, to reflect market activities in the stocks.

Sectorial Index Movement In September

Best Performing Stocks

Small caps that had been weak, compared to the high caps in the months leading into September soared this month, dominating the list of best performing stocks, led by C & I Leasing, which gained all of 53.77% of its opening price for the period, galloping on the strength of market sentiments and its strong quarterly numbers that hit the market. Newrest ASL came next, after appreciating by 26.06%; while Guinness Nigeria rose 23.42%, a month after the close of its N40bn rights issue; just as NEM Insurance chalked 17.17%. Other gainers on the table for the month included: Cutix 13.12%; Africa Prudential  12.54%; Continental Reinsurance, 11.94%; Fidson Healthcare, 10.00%; and Unlever Nigeria, 9.03%; among others.

Best Performing Stocks in September
Securities	Sector	Open	Close	% Change
C & I Leasing	Services	1.06	1.63	53.77
Newrest ASL	Services	5.68	7.16	26.06
Guinness Nigeria	Consumer Goods	76.98	95.01	23.42
NEM Insurance	Insurance	0.99	1.16	17.17
Cutix	Industrial	2.21	2.50	13.12
Africa Prudential	Other Financial	3.11	3.50	12.54
Continental Reinsurance	Insurance	1.34	1.50	11.94
Fidson Healthcare	Healthcare	3.20	3.52	10.00
Unilever	Consumer Goods	40.00	43.61	9.03
Redstar Express	Services	4.38	4.75	8.45
BocGas	Industrial	3.50	3.78	8.00
Transcorp	Conglomerates	1.28	1.36	6.25
AXA Mansard Insurance	Insurance	1.90	2.00	5.26

Source; NSE and Investdata Research

Worst Performing Stocks

On the other hand, the worst performing stocks for the period was Neimeth, which lost 21.84%, as a result of profit taking; ahead of AG Leventis Plc’s 16.90% loss owing to its weak quarterly numbers; followed by the 16.67% drop in the price of First Aluminum; and Julius Berger, 14.24% on the back of profit taking and weak numbers.

Worst Performing Stocks in September  2017
Securities	Sector	Open	Close	% Change
Neimeth	Healthcare	0.87	0.68	-21.84
AG Leventis	Conglomerates	0.71	0.59	-16.90
First Alliums	Industrial	0.66	0.50	-16.67
Julius Berger	Construction	34.20	29.33	-14.24
Presco	Agribusiness	68.39	59.00	-13.73
Oando	Oil/Gas	6.85	5.93	-13.43
Skye Bank	Financial	0.61	0.53	-13.11
McNichols	Consumer Goods	1.35	1.20	-11.11
Lafarge Africa	Industrial	57.00	50.68	-11.09
Livestock Feeds	Agribusiness	0.94	0.84	-10.64
NB	Consumer Goods	183.60	165.00	-10.13
Vitafoam	Consumer Goodss	2.79	2.51	-10.04
UBA	Financial	9.59	8.64	--9.91

Source: NSE & Investdata Research

Chart view of August market.

NSE ASI MONTHLY TIME FRAME FOR AUGUST

From the above graph, you would notice that the NSEASI on monthly basis is side trending 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.  The candlestick formation for the month supports reversal, depending on market forces as we cross over to the last quarter of 2017, for which trading kicks off on Tuesday with high hopes that speculators will return to play the market ahead of year-end activities.