NGSE Indicators Close Lower, As Portfolio Investor Selloffs Strain External Reserves

Market Update for August 15, 2018

The stock market at midweek had a very volatile session, increasing its losing momentum as more equity prices nosedived on the strength of continued panic selloffs irrespective of fundamentals and interim dividend expectations from stocks like the United Bank for Africa Plc, Access Bank, Stanbic IBTC and, possibly Fidelity Bank. The selloffs have been hastened by the hazy geopolitical environment and dwindling economic activities which remained amidst the declining level of the nation’s foreign reserves as shown on the Central Bank of Nigeria (CBN) website
Wednesday’s slide was also despite the continued decline in the rate of inflation as shown in the July Consumer Price Index which stood at 11.14% year-on-year, the 18th consecutive monthly decline as revealed by data released by the National Bureau of Statistics (NBS). For the first time, the rate also recorded month-on-month decline of 0.09% from the June level.
The NSE index opened midweek trading sharply lower in the morning and was sustained till midday into afternoon to touch a low of 35,061.28 basis points, from the high of 35,300.21bps, before retracing up marginally in the last few minutes, before closing at 35,074.82 points on improved volume. This signals the fact that investors are bailing out for safety to watch events unfold in the short term ahead of next year’s general elections.
The recent various economic data from CBN and NBS are mixed, confirming the prevailing situation as investor confidence declines, leading to selloffs now taking its toll on the external reserves (READ MORE). This is as foreign portfolio managers continue to drawdown their investments, despite the relatively high price of oil and increased production level on day basis.
Investdata Consulting’s Sentiment Report and Daily Reading of the market reveals blue chip companies played by foreign and institutional investors have suffered the most in this downturn. These investors have continued to exit their positions while some stocks had remained slightly stable, suffering minimal decline from their peak levels, due to the absence of hot money in those stocks. These stocks are defensive at this current trend. To identify such stocks, join Investdata Buy & Sell Signal setup for the watch list.
In the current stock market downtrend, some stocks have remained fundamentally okay. Identifying when to buy is however what technical analysis will do for you, that is why you should go for Investdata Consulting’s July 28, 2018 Stock Trading Workshop HOME STUDY PACK. These are audio-visual materials you can play to view the live class through your phone and laptop. This will help you determine when to jump into the market and specific stocks, or stay out. For your Study Pack, call or send ‘YES’ to the phone numbers below.
Midweek market technicals were negative and mixed as volume traded was high and above the recent market average in the midst of negative market breadth and sentiments as revealed by Investdata’s Daily Sentiment Report, showing a ‘sell’ position of 94% and ‘buy’ volume at 6%. Volume index was 0.82 of the day’s total transactions.
The energy behind the day’s market performance was weak, as indicated by the money flow index at 28.90bps, sharply down from previous day’s 34.85 points, indicating that funds are still leaving in the midst prevailing low liquidity in the market and economy.

Index and Market Cap
The benchmark index at the end of midweek trading lost 213.41bps at 35,069.34bps, after opening at 35,288.23bps, representing a 0.62% decline, while market capitalisation dropped by N79.91bn to close at N12.81tr, from an opening value of N12.88tr, representing 0.62% value loss, to further worsen investors’ negative position.
If you haven’t joined Investdata Buy & Sell Signal setup, where you can look over our shoulder and follow to know when to hold cash and take advantage of the watchlist of stocks for different investment purposes that you may position in, as the market decline create new opportunity. To register and become a member send Yes or stocks to the phones numbers below. The number of stocks on our watch list has increased due to the prolonged correction. Take advantage of this service to buy right and sell right.
Wednesday downturn was due to selloffs in medium and high cap stocks like Nestle, Guaranty Trust Bank, Zenith Bank, Oando, UBA, UBN, Berger Paints, Japual Oil, Eterna, Dangote Sugar and Cadbury. These impacted negatively on the NSE’s Year-to-Date return, which further worsened to 8.30%, just as market capitalization decline within the period stood at N805.98bn, 5.92% below the year’s opening value.



Bearish Sector Performance
The sectorial performance for the day was largely bearish, except for the NSE Insurance that was up by 0.04%. Market breadth was negative as the number of decliners outpaced advancers in the ratio of 29:12, to continue straight ninth sessions of bearish transition.
Market activities were up in volume and value by 27.37% and 80.07% respectively to 209.54m shares worth N2.9bn from the previous day 164.51m units valued at N1.61bn.
Transactions for the day were boosted by trading in financial services and conglomerates stocks: UBA, Zenith Bank, FFCMB, Guaranty Trust Bank and Transcorp that witnessed increased trading to top the activity chart.
The best performing stocks at the end of the session were Linkage Assurance and Union Diagnostic that topped the advancers’ table, after gaining 9.68% and 3.76%respectively, which closed at N0.68 and N0.28 respectively, purely on market forces.
On the flip side, UACN Property and Berger Paints were the worst, losing 10% and 9.72% respectively to close at N1.71 and N6.50 respectively as a result on profit taking and market trend.



Market Outlook
We expect the rate of market decline to reduce as bargain hunters take advantage of this low prices ahead of political party primaries. The ongoing anxiety in Nigeria’s political environment by party leaders are scaring investors. The market may also likely be impacted by the outcome of the expected Q2 GDP report any moment as the whole world watches Nigeria’s politicians ahead of the all-important 2019 general elections.
Meanwhile, investors continue to interpret the recent Q2 earnings reports so as to rebalance their portfolios and watch the political space, while analysing the actual numbers released so far as a basis for determining the market and economy’s direction going forward. More disappointing reports will drive the market further down, or inspire a reversal if the numbers beat expectation.
Also important, is the outcome of the shadow elections by political parties taking place in the month of August. Investors should review their positions in line with investment goals, strength of the company numbers and act as events unfold in the global and domestic environment.
However, we would like to reiterate our advice that investors should go for equities with intrinsic value, especially during this season were Q2 interim dividend payment are expected in the market arena very soon.
We advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst improving company, economic and market fundamentals.

Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose@investdataonline.com
ambroseconsultants@yahoo.com
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https://investdata.com.ng/2018/08/ngse-indicators-close-lower-as-portfolio-investor-selloffs-strain-external-reserves/