Volatility Still, As Investors Review Q3 Numbers, Rebalance Portfolios, Ahead 2019 Polls

Market Update for December 3

The nation’s equity market had a mixed session on Monday to kick start the new month on a negative note as the composite All-Share index closed lower to halt previous day’s gains on a mixed sentiment and low traded volume.
Friday’s seeming improved buying interest was attributed to traders and fund managers end-of-month window dressing of their trading accounts and portfolios which pushed the market up. Trading opened on Monday with marginal gap up and then sell-off at mid-morning to early afternoon as high cap stocks like Dangote Cement, Nigerian Breweries and Stanbic IBTC lost value alongside profit booking in insurance stocks. The index however retraced up after touching intraday low of 30,732.76 basis points from highs of 30,895.41bps before finally closing at 30,798.76bps on a positive market breadth.

The rebound in the manufacturing activities as reported by CBN as PMI stood at 57.9 points in November against 56.8 in October, signaling a significant expansion in the sector is expected to reflect on Q4 economic data ahead of the earnings reporting season in 2019Q1. In addition to positive trade talks that came out of G20 summit where the U.S and China agreed a 90-day ceasefire for re-negotiation, added to the rebound in oil price ahead of this week’s meeting of the Organisation of Petroleum Exporting Countries (OPEC).

Monday’s market technicals stayed weak and mixed with lower volume traded than the previous day’s in the midst of positive market breadth and mixed sentiment as revealed by Investdata’s Daily Sentiment Report, which shows a sell position of 59% and 41% buy volume. The volume index for the day’s total transactions was 0.76.
The energy behind the market’s performance was further weakened, as Money Flow Index dropped to 24.79bps, from previous day’s 25.96ps, indicating that funds are leaving some stocks for others and also the market in the midst of prevailing low liquidity ahead of year end rally

Index and Market Cap
At the end trading on Monday, the Nigerian Stock Exchange’s ASI shed 75.41bps, closing at 30,798.76bps after opening at 30,874.17bps, representing 0.24% decline, just as market capitalization dropped N27.54bn at N11.24tr from an opening value of N11.26tr, representing a 0.24% value loss.
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The day’s downturn increased Year-to-Date loss position to 19.47%, as market capitalization YTD decline stood at N2.37tr from its opening level in January, representing 17.56% down.

Mixed Sectors Indices
Sectorial performance indices were largely bearish, except for the NSE Banking and Oil/Gas that closed higher, just as market breadth was positive with advancers outnumbering decliners in the ratio of 19:14.
Market activities were mixed as volume fell by 16.93% and 63.58% to 207.24m shares from previous day’s 249.42m units, while value improved by 6.63% to N2.55bn from Friday’s N2.39bn, with transaction volume boosted by financial services stocks like: FCMB, FBN Holdings, UBA, Diamond Bank and Zenith Bank.
Jaiz Bank and Diamond Bank were the best performing stocks, topping the advancers table, after gaining 10% and 9.23% respectively, closing at N0.44 and N0.71 each on low price attraction and market forces. The decliners’ side was led by Continental Reinsurance and MRS Oil that lost 10% and 9.98% respectively, closing at N1.80 and N25.70 each, on market forces and profit booking.

Market Outlook
We expect sustained bargain hunting and portfolio repositioning for year-end to shape performance of the market ahead of Santa Claus rally, as number of companies hitting new 52-week low are on the increased to reflect undervalue state of the market.
The ongoing volatility will persist as Q3 numbers assist investors and fund managers rebalance their portfolios, while watching the political space and ahead of the expected Q3 GDP and full year company earnings position. These 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 their 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 low in the midst of weak company, economic and market fundamentals.

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Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467
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