As Political Clouds Thicken, NSE Capitalisation Sheds N760bn In Sept

Opening Graph: NSE ASI MONTHLY TIME FRAME FOR Sept

September Market Roundup 2018
The last trading session of the week and month of September, as well as the third quarter closed flat on Friday with mixed sentiments and relatively weak demand. There was also increased selloff due to the heightening political risk ahead of the 2019 general elections, which seem outside of the control of traders and regulators, following, following which many investors have taken comfortable seats on the fence in their flight to safety.

The Nigerian stock market’s indicators have remained on a downtrend for eight consecutive months, despite a attempt to resist further decline in June, before caving in on continued panic selloff and profit booking.
Within the month of September, the NSE composite All-Share index touched 15-month lower lows in the face of different attempts to rebound that failed on continued outflow of funds that reduced liquidity. The current economic retrogression is a reflection of Nigeria’s present macro-economic indices that reveal the stagnation of the economy, which has been blamed on the present intense focus on politics at the detriment of the economy. Another challenge that has been reiterated repeatedly is the 2018 capital budget implementing style of the President Muhammadu Buhari administration.

In the course of trading in the just concluded third quarter, and year-to-date, the NSE’s composite index closed lost 14.4% and 14.32% respectively, a pointer to likelihood of 2018 closing red, as projected in our Invest 2018 Traders & Investors Workshop held in December 2017.
Expectedly also, all sectors of the market closed negative for the month under consideration, with the benchmark NSE index shedding all of 2,082.08 basis point to close at 32,766.37bps, from an opening figure of 34,848.45bps, representing a 5.97% decline. During the month, the index oscillated between a low of 31,938.59bps and 34,966.72bps highs, remaining below the 33,000 psychological line. Market capitalisation for the month fell by N760.12bn to close lower at N11.96 trillion, from an opening value of N12.72 trillion, representing a 5.97% value loss.

The mixed performance recorded in September was due to cautious dominated by selling positions, as investors sold-off their positions due to the political tension, dwindling economic activities and capital outflow. Also worthy of note is the mixed economic data released within the period by the Central Bank of Nigeria (CBN) and National Bureau of Statistics (NBS), particularly the recent reversal in inflation data. Inflation rose by 11.23% in August from 11.14% in July, after 18 consecutive months of steady decline, signaling a rise in the price of food items, owing to the raging insecurity preventing farmers from accessing their farmlands. Also, the nation’s foreign reserves continues to decline, in spite of the rise in oil prices at the international markets, with Brent Crude jumping 4.1% as at Friday, to $82.72 per barrel, its highest in nearly four years.

The volatility witnessed during the period was high on low volume traded, reflecting cautious trading and mixed sentiment, resulting in 13 trading sessions of down market and seven sessions of bull-run. Traded volume for the month was down by 23.6% to 3.95 billion shares from 5.17 billion shares in the preceding month.
Market breadth for the month was negative with decliners outnumbering advancers in the ratio of 64:23 to continue eight months of bear transition with declining magnitude in loses, while stock prices adjusted up slightly in the past trading sessions of the month. The sellingvolume of total transactions for the month was 73%, while buying position was 27%, a repeat of the situation in August, while volume index for the period was 0.57.

Best Performing
Topping the month’s worst performing sectorial index was the NSE Insurance which shed 9.77%, amidst the ongoing regulator-induced recapitalization fever in the industry; followed by the NSE Industrial’s 8.33%, reflecting profit taking and selloff in blue in chips. The NSE Consumer Goods index was next, after sliding 7.56%, amidst investor selloffs due to weak earnings from the sector, a reflection of weak purchasing power amongst consumers in the country. Others were the NSE Oil/Gas and NSE Banking, which dropped 3.54% and 1.73% respectively, in line with market trend.

Small caps however closed strong, dominating the table of best performing stocks. The biggest gainers table for the month was Union Diagnostic, which garnered 30.77% of its opening price, galloping on the strength of market sentiment and better quarterly numbers; followed by UACN Property’s 24.20% notch; while C & I Leasing chalked 20.8%, as the company continues its deep play in the oil servicing sector. Unity Bank gained 17.24%; Regency Alliance Insurance, 14.29%; First Aluminum, 13.89%; Sterling Bank, 11.11%; VeritAssurance, 11.11%; Neimeth Pharmaceuticals, 10%; and AIICO Insurance, 10%; among others.

Worst Performing Stocks
Worst performing stock for the period was Universal Insurance, which lost 42.50% of its opening price, due to the new price rule of the NSE. It was trailed by AXA Mansard Insurance Plc, which lost 23.53%; followed by the 20% drop in Cornerstone Insurance; and Flour Mills, 19.35%.

NSE ASI MONTHLY TIME FRAME FOR Sept
NSEASI on monthly time frame is trending down as revealed by the index action to form a quadruple bottom which is opposite of the bullish “V,” where the market tested a strong support line that may usher in reversal in the new month on the expected Q3 earning reporting season. The candlestick formation for the month support rebound depending on the market forces as we cross over to the last quarter of the year to kick off trading on Tuesday with expectation that speculators will return to play the market.

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CRO|Investdata Consulting Ltd
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