2017 FULL YEAR BEST PERFORMING STOCKS ON EARNINGS REACTION

Looking closer to the market reaction to earnings reports released for Q3 2017 will give an insight into what to expect of the  full year earnings reports when they are presented to the Nigerian Stock Exchange (NSE) in 2018, considering the  economy recovery as the monetary and fiscal authorities try to complement each other at this point.

It must be noted that the market situation today and performance of 2016 are different, given that the factors on ground in the market currently are very much positive because the economy has finally come out of recession and continuing on the path of recovery and growth. These factors have equally reflected on the market and companies fundamentals. 

The Nigerian stock market is truly becoming a barometer to measure actually activities in the economy, as some analysts have argued, judging from the fact that it was the first to go into recession long before the Nigerian economy began to exhibit the traits, closing negative for three consecutive years. The market’s indicators also turned green month-on-month long before the National Bureau of Statistics (NBS) confirmed Nigeria’s positive GDP growth in the second quarter of 2017. The market also has confirmed the inflow of domestic and foreign capital seeking for best returns.

Investdata Research believes that price movement of equities at the time earnings reports were released to the market should guide investors and traders to know what to expect when the full-year numbers eventually come seeing how the market responded in Q3.

What you discover as market reaction when the full year earnings reports start pouring in beginning from first quarter of 2017 (between January and March) may surprise.

The table below shows how market reacted to positive numbers and negative reaction days as the stock’s price declined when the companies presented their 2016 full-year score-cards.  The best performing stocks are those that gained the most on their earnings reaction days.

SECURITIES	Sector	Released Date	5-Day    %Change
FIDELITY	Financial	4/7/2017	25.00
MOBILE	Oil/Gas	3/30/2017	22.03
NASCON	Consumer Goods	4/5/2017	21.41
NESTLE	Consumer Goods	3/2/2017	21.23
DANGOTE FLOUR	Consumer Goods	4/5/2017	17.92
CAP	Industrial Goods	3/29/2017	15.75
CONOIL	Oil/Gas	6/21/2017	15.74
UACN	Conglomerates	3/31/2017	15.38
ASL	Services	5/3/2017	14.25
NB	Consumer Goods	2/20/2017	13.04
DANGOTE SUGAR	Consumer Goods	3/31/2017	12.56
NAHCO	Services	4/5/2017	12.27
CONTINENTAL RE	Insurance	3/14/2017	12.26
BETA GLASS	Industrial Goods	3/3/2017	10.00
TRANSCORP	Conglomerates	3/1/2017	8.69
LAFARG AFR	Industrial Goods	2/22/2017	7.92
MANSARD	Insurance	3/30/2017	5.63
NEM	Insurance	3/31/2017	5.00
UBN	Financial	3/31/2017	4.80
STERLING BANK	Financial	3/30/2017	4.29
C&I Leasing	Services	3/3/2017	4.00
CHAMPION	Consumer Goods	3/27/2017	2.92
FBNH	Financial	4/27/2017	2.57
CADBURY	Consumer Goods	3/21/2017	1.74
CUSTODIA	Insurance	3/28/2017	0.63

As revealed by the table above, Fidelity Bank ranked first with a huge gain of 25.6% on its earnings reaction for five trading sessions, which means it gained over 5% daily on the average within its first five days; followed by Mobil Oil with a gain of 22.03%, and ahead of National Salt’s 21.41%. Other top gainers within the period under review were: Nestle, Dangote Flour and CAP. Notice also that on the list, Consumer Goods manufacturing stocks occupied the top five position, except for Fidelity Bank and Mobil. This should give the investing community an insight into where to look for best numbers in the coming earnings season, even as the banking industry remains a honey-pot for discerning investors, especially helped by improved liquidity in the system, powered by the recovery mode of the economy.

SECURITIES	Sector	Released Date	5Day% Ch
FO	Oil/Gas	1/31/2017	-18.96
DIAMOND BANK	Financial	4/4/2017	-13.19
MAY&BAKER	Healthcare	3/31/2017	-12.00
LIVESTOCK	Agribusiness	2/28/2017	-11.76
DANGOTE CEMENT	Industrial Goods	2/28/2017	-11.68
NPF	Financial	3/3/2017	-7.09
AFRICAN PRU	Other Financial	2/23/2017	-6.51
FIDSON	Healthcare	3/30/2017	-5.00
CCNN	Industrial Goods	3/27/2017	-4.89
UCAP	Other Financial	2/16/2017	-4.86
CAVATON	Services	3/31/2017	-4.30
TRANSNATION WIDE	Services	3/29/2017	-4.00
GSK	Healthcare	2/28/2017	-3.31
FCMB	Financial	2/28/2017	-3.20
UBA	Financial	3/24/2017	-2.71
STANBIC	Financial	3/22/2017	-2.70
ZENITH	Financial	2/27/2017	-2.57
TOTAL	Oil/Gas	3/15/2017	-2.54
ACCESS BANK	Financial	3/6/2017	-1.91
GUARANTY	Financial	3/8/2017	-1.73
UNILEVER	Consumer Goods	3/23/2017	-0.93
SEPLAT	Oil/Gas	3/31/2017	-0.28

The worst performed in earnings reaction days for the period was Forte Oil that topped the table with 18,96 percent, next was Diamond Bank with 13.19 percent followed by May & Baker, Livestock Feed and Dangote Cement.

Let the tables above guide you this period that prices are relatively high on the strength of liquidity and confidence  as you position for expected  earnings to know how to set your target if the reports are positive  or negative when the market react to it.  It is important to set target as every investment is against expectation, if not met exit on time to cut loss and protect your capital.

The improving nation forex reserve a plus for the market and economy in 2018.

Nigeria’s external reserves recorded one of its most significant jumps this year, when it soared by a princely $2.834bn or 8.11% in just three weeks, when it closed December 21, 2017 at $37.78bn, from $34.945bn at the end of November 2017, according to data available on the website of the Central Bank of Nigeria (CBN) on Friday.
Month-on-Month, the nation’s reserves level soared by $3.35bn or 9.73% from $34.429bn on November 21, 2017; while Year-to-Date (YTD), it rose $11.936bn or 46.18% from $25.843bn on December 31, 2016.
Year-on-Year, Nigeria’s reserves level jumped $12.47bn or 49.27% from $25.309bn on December 21, 2016.

Data gleaned from the CBN’s website, month-on-month, by Investdata Research showed that the last time the nation’s reserves rose higher was in February, when it stood at $29.646bn on February 28, 2017, after climbing by $3.803bn or 14.72% from $25.843bn at the end of January.
Investdata Research also note that the reserves growth slowed down in March and was flat in the following month, before dropping in May and June, first to $30.329bn from $30.864bn in the preceding month; and then $30.288bn in June.

Growth thereafter commenced slowly between July and November, before attaining its new peak, which according to Mrs. Patience Oniha, Director-General of Nigeria’s Debt Management Office (DMO), may have resulted from sources besides the regular inflow of funds from portfolio investments and earnings from crude oil and other non-oil export proceeds, which are warehoused by the CBN.

Addressing Nigeria’s capital market community on Wednesday in Lagos, at the listing of the $3bn Eurobond and $300m Diaspora bond for trading on the Nigerian Stock Exchange (NSE), Mrs. Oniha said the latest borrowing from the international capital markets would besides helping the Federal Government restructure its mix of foreign and domestic debts, reducing debt servicing costs, also “supports Nigeria’s foreign reserves and the private sector.