Market Update for the week ended November 16 and Outlook for Nov. 18-23

Trading on the Nigerian Stock Exchange in the past week was mixed, closing negative despite the improved volume driven by low price attractions as bargain hunters seemingly position for year-end Santa Claus rally. The session was however dominated by sell-offs as the market broke down the 31,949.33 basis points strong support level and rebounded to close above 32,000 mark.
At this point, the market remains dicey with the probability of a continued down trend or rebound now 50-50 on the strength of market forces and the outcome of the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) meeting, the last for the year. The all-important meeting has been rescheduled to Wednesday and Thursday, owing to Tuesday’s public holiday to mark the Id-el Maulud as declared by Federal Government.

Investdata Research expects issues that issues such as the nation’s declining reserves, impact of the N30,000 new minimum wage, the fall in oil price below $70, as well as the sustained rise in inflation rate. There is also the likely impacted of the oversubscribed Nigeria’s latest Eurobond issuance on the reserve needed to manage Nigeria’s exchange rate at a time of rising cost of debt servicing, which is a major concern for the country, especially as the budget continues to be financed external borrowings.

The market has become even more undervalued in nature, with many stocks selling at between 10 and 11-year low, impacting positively on the week’s performance which resisted further decline after side-trending, while waiting for external and internal trigger.
The continued decline in emerging market stocks after the 2017 rally was attributed to selloffs that were induced by the rising interest rates in developed economies, the U.S-China trade war tension and stronger US$. Others include the economic slowdown in China, crises in Argentina, Turkey and political uncertainties in Africa second largest economy.

With many emerging markets and their stocks trading below their five-year low, while medium and long-term outlooks remain positive and capable of attracting funds ahead of 2019. Recently, the Bank of America Merrill Lynch monthly survey showed that investors increased their emerging market stocks allocation to 13% in November, from 5% in the previous month, while reducing their exposure to developed markets.
Back home, the week’s trading started on a negative note, losing 0.18% on Monday. There was mild recovery on Tuesday when the benchmark index gained 0.03%, before the pullbacks on Wednesday and Thursday, when the All-Share index shed 0.07% and 0.76% respectively. The market however retraced up by 0.58% on Friday, bringing the week’s cumulative loss to 0.44%, thereby reversing previous week’s gain on a mixed sentiment in the midst of volatility and portfolio rebalancing.

Market technicals were negative and mixed, on high volume traded and negative market breadth, with strong selling pressure as revealed by Investdata’s weekly Sentiment Report, showing a sell position of 63% and buy volume of 37%. The volume index of total transactions within the period was 1.00.
Momentum behind the week’s performance were weak despite the demand for highly capitalized stocks as money flow index fell to 30.85bps, from 31.07bps in previous week, an indication that funds are leaving some stocks and market despite the prevailing low liquidity.

Equity Indicators Last Week
Trading for the week ended with composite index shedding 141.93 basis points to close at 32,058.28bps, after opening at 32,200.21bps after touching a high of 32,402.92bps, from low of 31,854.43bps on high volume. Similarly, market capitalization closed at N11.7tr, from N11.76tr, representing 0.44% dip in value.

NSE ASI WEEKLY TIME FRAME
(See Opening Graph)

Low and medium cap stocks dominated the advancers table amidst increased demand for stocks that hit new low within week.
Meanwhile, the NSEASI’s year-to-date negative returns rose to 16.18%, just as market capitalization dropped to N1.98 trillion, or 14.58 % below the year’s opening value.

Bearish Sectors Indices
The sectorial performance indexes for the period were largely bearish, except for the NSE Consumer and Industrial Goods indices that closed higher. Market breadth was negative, with decliners outpacing advancers in the ratio of 36:24, to halt the previous week upmarket.
The week’s transactions were mixed as volume a was up by 19.06% to 1.29bn shares from 1.08bn units, while value slipped 36.59% to N11.54bn from the previous week’s N18.2bn, boosted by trading in financial service, services industry and Consumer Goods.
The best performing stocks for the period were Unity Bank and Flour Mills, which gained 30.99% and 11.69% respectively to close at N0.93 and N17.20 per share, on low price attraction and market forces. Diamond Bank and C/I Leasing lost 29.69% and 26.43% respectively, close at N0.90 and N2.06 on profit taking and market trend.

Market Outlook
We expect speculative trading continue to shape activities in the short-to-medium term, as all eye on the outcome of MPC meeting. However, any position taking now should be for medium-to-long term horizon especially in stocks with good fundamentals, while watching the political space, since Q3 numbers have given insights into what the expected Q3 GDP and full year company earnings power will be.
As presidential campaign kicks off, Nigerians are expecting new mission, new strategy, new roadmap to address economic issues, poverty, development human capital, infrastructure and education with deliverable time. These campaigns are likely to drive prices north, or south, while determining market direction before or after Presidential election. 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,
We advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst mixed company, economic and market fundamental.

Attention! Attention!! Attention!!!
Invest 2019 Traders & Investors Summit
Theme: Best Returns In 2019 & Beyond: Adopting The Billionaire Mentality In Stock Selection

Sub-Topic
1. Pre-election year performance Review and post-election Investing opportunities
2. Simple Strategies for picking undervalued stocks With Fundamental & Technical Tools
3. Psychology of Equities Trading For Managing Positions & Money
4. Mastering Market Dynamics & Dividend Techniques To Grow Your Income in 2019
5. Picking the Right Stocks to Retire Rich In Financial Independence
6. Nigeria’s Post Election Economy & 2019 Sectoral Analysis
7. Understanding the big picture of Budget Delay & Its Implication on the Economy/Stock Market

Investdata Consulting Ltd presents The 8th edition of its TRADERS & INVESTORS SUCCESS SUMMIT tagged: INVEST 2019, designed to be the biggest yearly workshop for stock market traders &investors in Nigeria.

Theme: Adopting The Billionaire’s Mentality In Stock Selection.
Venue: Ostra Hotel & Hall, Alausa, Opposite NNPC Gas-Plant Ikeja Lagos.
Date: Saturday, December 8, 2018.
Time: 10a.m.

The huge decline in stocks from its January 2018 peak has not necessarily been due to the fundamentals of quoted companies, but investors flight for safety over uncertainties arising from next year’s general elections, participants will learn from experts/facilitators at the workshop, how and where to position for juiciest returns, depending on investment horizon.
Previous editions have attracted participants from diverse class of investors and traders, as well as several world-class professionals and experts as speakers and facilitators, including representatives of quoted companies and stockbroking firms. The event has helped market players to effectively time opportunities for higher returns in the New Year.

In today’s equity market, there is wisdom in being able to identify ‘buy’ opportunities very early and sell for maximum returns, while minimizing loss in any market situation.Understanding the dynamics of the stock market during any cycle is the very key to successful trading and investing. For this to happen,we must arm ourselves with knowing the essential driving forces behind the market as they move up and down.

At the INVEST 2019 TRADERS & INVESTORS SUCCESS SUMMIT (TISS) you will discover some seldom considered aspects of investing and trading that can help you bag more big winners, while ratcheting down the number of losers in 2019 and beyond.
This summit will provide answers to these six crucial questions AND others

• What exactly is it we are trying to do as traders & investors?
• What occurs every post-election year that we wish to take advantage of?
• What are the prevailing market moves and who are the dominant players?
• What is ‘smart money’ doing?
• Where should we look to enter the market or exit?
• Is it the same every day, season and year?

When you answer these important (and frequently overlooked) questions correctly, your trading/investing skills will launch into new levels.
For Registration kindly send YES or REG to 08028164085, 08032055467, and 08111811223 now for details.

Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467
https://investdata.com.ng/2018/11/medium-long-term-positioning-amidst-safe-bets-on-mpc-meeting-outcome/