Expect Speculative Trading Ahead, As Investors Go For Underpriced Value Stocks On NGSE

Market Update for the week ended April 5 and Outlook for April 8-12
Trading for the first week in the second quarter of 2019 was the worst period on the Nigerian Stock Exchange (NSE) in recent times, consolidating four consecutive weeks of negative outing as the confidence crisis and low liquidity linger on in the aftermath of the country’s February 23 Presidential election.

The abysmal performance in the period under consideration was quickened by the exiting smart money, just as there was over supply to new foreign investors coming in to take advantage of the low equity prices and high yields. These resulted in the week’s high traded volume that affected the prices of all kind of stocks at a time of low demand due to liquidity hiccup.

The recent report by the International Monetary Fund (IMF) on the nation’s population rate growing faster than its GDP, seem to reaffirm calls over the years for the government of Muhammadu Buhari to undertake a wholesale review its Economic Recovery Growth Plan (ERGP). The task should be triggering development of the Nigerian economy to drive growth, rather than the way it is being pursued at the moment. Government needs to revisit its economic agenda and infuse or adjust its policies to become pro-economic development, while working to make Nigeria a preferred investment destination.

The market’s extended risk under the Buhari administration and indeed the economy are mixed as has have been observed over the past four years, following which stock prices are back within sniffing distances of their record lows. The challenge also is that it does seem the situation may not improve, unless things are done differently now, starting from the calibre of persons appointed into the Federal cabinet. There is also the urgent need for a change in governance, disbursement and implementation styles of government.

Analysts and economist are arguing that the recent expansion cycle in the Purchasing Managers’ Index may continue with the cut in Monetary Policy Rate (MPR) from 14% to 13.5%, which they have argued, could have been more.
However, these are the moments when real wealth can be created in stocks, by ensuring you are acting, not rather than remaining on the sidelines. With that at the back of my mind, today I am offering 25% discount for new and existing subscribers to the Investdata Buy & Sell Signal Setup service within the month of April.

Movement Of NSEASI
Back to the market, the NSE had four trading sessions of a negative performance, last week, following which the benchmark NSE All Share Index and Market Capitalization fell by 4.59% and 4.73%. The index and capitalization for the week closed at 29,616.38 basis points and ₦11.12tr respectively, from 31,041.42bps and ₦11.67tr in the preceding week, extending the NSEASI’s year-to-date negative position to 5.77%.
Kobo stocks dominated the advancers’ table during the period as blue chip stocks suffered losses on selloffs and price adjustment for dividends declared. The selloffs were especially in highly capitalized equities that remain favourites of foreign investors, led by those in the consumer goods sector, following which the sectoral index was down 7.73%, followed by industrial goods with 6.48%.

Energy behind the week’s performance was weak and down as reflected in money flow index at 31.35 basis points, compared to 42.82bps in the previous week, indicating that funds are exiting the market, just as the high buying pressure of 95% for the period under review.

NSEASI Weekly Time Frame
The NSE index further pulled back during the week on a high traded volume, forming a double bottom that signaled a possible reversal, but on the continuing negative sentiment and with the Money Flour Index looking down, the possibility of reversal appears very slim. The index is trading below its 20-Day Moving Average, after testing the recent 29,536.48bps support level.

Bearish Sectors Indices
Market breadth for the period was negative, with decliners ’outnumbering advancers in the ratio of 55:14 as in previous week’s down market; even as volume and value for the period rose by 19.39% and 31.12% respectively to 3.14bn shares worth N16.77bn from the previous week’s 2.63bn units valued N12.79bn. As foreign investors-led cross deals flooded the market.

The best performing stocks during the week were Ikeja Hotel and Chams, topping the advancers’ table with 20.21% and 20% gains respectively, closing at N2.26 and N0.24 per share on market forces and impact of the three kobo dividend. On the other hand, Eterna and Union Diagnostics suffered the biggest losses of 24.53% and 23.33% respectively, closing at N4.00 and N0.23 on profit taking and general market direction.
During the week also, the share price of UBA Plc was adjusted for a dividend of 65 kobo, just as its management announced the close period for its Q1 2019 earnings report.

Market Outlook
We expect the up and down performance to continue this week, as Infinity Mortgage Bank kicks off the Q1 earnings reporting period with stronger numbers that are yet to reflect on its share price. More first quarter earnings are likely to hit the market ahead of the March Consumer Price Index.

With the prices of major blue chips stocks continuing to drop in recent weeks, we expect speculative trading to shape the market’s direction in the next trading week despite the seeming negative outlook.
The volatility witnessed last week, was driven by traders and investors repositioning ahead of dividend declaration by major listed companies.

The ongoing volatility will continued as investors and fund managers rebalance their portfolios, with eyes fixed on the political space and ongoing full year company earnings and post-election market dynamics. Investors should review their positions in line with their investment goals, strength of 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 and allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain low in the midst of mixed company numbers, weak economic and market fundamentals.

Our investment education train moves to Port Harcourt, Rivers State, with Chart Summit 2019!
Attend the Practical Conference on Technical Analysis Application on stock market for novices and Advance Traders, where we would take participants through:
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• Know what Smart Money is doing
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The workshop is scheduled as follows:
FEE :N10,000
DATE: April 13. 2019
TIME: 10am – 4.00pm
VENUE: Emerald Hotel, 193, Aba Road Rumuola, Port Harcourt, Rivers State.

This Summit is designed specifically for those who:
• Jump out of profit position out of fear
• Indecision in pulling the trigger for fear of a loss
• Holding on to losing positions for fear of realizing a potential loss
• Trading often leads into unplanned trades for fear leaving money on the table
• Small trade size or investing small amount because you’ve just had a large loss, or
• Increasing your position size to try and make up for past losses.

This practical workshop is for novice traders, investors, professionals and fund managers who want to overcome fear and improve their trading performance. The workshop is basically on practical charting on evidence-based techniques that is working in today market, just as the power of focused trading and investing strategies to help participants build mental skills and turn fear into profits, besides protecting capital.

Registration is ongoing
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Also, Come With Your Laptop for the practical sessions.

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The event, which held on Saturday, December 8, 2018, was yet another successful, insightful and educative outing that not only offered direction as to where investors should look for a profitable trade in 2019, insight into industries, sectors and companies to seek worthwhile returns. What stocks should you buy? Grab the pack for the 10 Golden Stocks with possibility of offering in 2019 multiples of what broader stocks do, coming out of this market correction environment.

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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
https://investdata.com.ng/2019/04/expect-speculative-trading-ahead-as-investors-go-for-underpriced-value-stocks-on-ngse/