Influx Of Audited 2018 Earning, Amidst Quarter-end Window Dressing On NGSE

Market Update for March 28
Trading activities on the Nigerian Stock Exchange on Thursday was very volatile and mixed, closing marginally high on a huge traded volume, as more corporate earnings were released in line with expected ahead of the statutory March 31 deadline, which is this weekend.
Numbers emanating from the second tier banks have been impressive, while others sectors posted mixed performance.

In all, 18 listed companies presented their scorecards to the market during the session and after, 17 of which were 2018 full results and one quarterly earnings from PZ Cussons. It is noteworthy that dividend proposed by eight of these companies for the year 2018 are higher and capable of spurring the market to marginal gains.

The impressive dividend of N2.50 is being proposed by Chemical Allied Products; FCMB, 0.14 kobo; Fidelity Bank, 0.22 kobo; Chams, 0.03 kobo; GSK, 0.50 kobo (READ); and BOC Gases, 0.40 kobo. Ecobank Transnational Incrporated also presented its audited figures showing weak earnings growth, but impressive 45% rise in bottomline (READ). The directors are however silent yet on dividend payment.

We expect an interesting session Friday as investors and traders react to these numbers and payout, despite the prevailing low liquidity and confidence that have militated against the market since the outcome February 23, presidential and National Assembly elections.
The month of March is the peak of earnings season and economic reports released within the period have been relatively positive, with February inflation rate declining to 11.31%, while the manufacturing sector’s Purchasing Managers Index expanded to 57.4 from 57,1 points.
Meanwhile, analysts have continued to interpret the impact of Tuesday’s rate cut by the Central Bank of Nigeria (CBN) on the economy in the short to long run, as developed economies are trying to stimulate their economic activities in their domains, to avoid a slowdown or depression of any kind.

Thursday’s trading opened marginally on the upside in the morning session, before pulling back mid-morning to early afternoon and retraced up in the late afternoon. This followed the increased buying interest in banking stocks after touching intraday lows of 30,770.60 basis points, from its high of 30,896.86bps. It then closed the session slightly above its opening figure at 30,833.50bps, after testing a new recent support level.

Market technicals for the session were positive, but weak as volume traded was huge and higher than previous day’s in the midst of negative breadth and mixedsentiment. This was revealed by Investdata’s Daily Sentiment Report, showing buy position of 50% and sell volume at 50% on total daily transaction volume index at 5.67.
Also, momentum behind the day’s market performance were weak and poor, despite the marginally up market as shown by money flow index at 8.77 points, from previous day’s 13.64bps. This indicates that funds left the market even as some stocks were up.

Index and Market Cap
At the end of the day’s trading, the benchmark NSE All-Share Index gained a marginal 4.05bps to close at 30,833.50bps, from 31,829.45bps, representing a 0.01% up. Market capitalization was up by N1.53bn, closing at N11.59tr from its opening value of N11.59tr, representing a marginal 0.01% growth.
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The session’s upturn was driven by dividend investors positioning in low, medium and high cap stocks like Guaranty Trust Bank, UBA, ETI, Wema Bank, NASCON, and Consolidated Hallmark Insurance. This impacted on Year-to-Date loss, extending it to 1.90%, while market capitalization dropped by N29.16bn, or 0.25%, from the year’s opening level of N11.72tr.
Bearish Sector Indices
All sectoral performance indexes were bearish, except for NSE Banking that was in green after gaining 0.36%. Market breadth was negative with decliners outweighing advancers in the ratio of 17:14.

Market activities in volume and value were up by1,359.42% and 99.81% respectively as 1.92bn shares worth N2.80bn changed hands, compared to previous day’s 131.43m units valued at N1.4bn.Volume was driven by financial services and ICT stocks like: WemaBank, Chams, UBA, Sterling Bank and Zenith Bank.
C &I Leasing and NASCON were the best performing stocks for the day, after gaining 9.90% and 9.89% respectively to close at N7.99 and N20.00per share on market sentiments. On the other hand, Sovereign Trust Insurance and UBN lost 9.09% and 7.04% respectively, closing at N0.20 and N6.60 each, also due to market forces.

Market Outlook
We expect a marginally up market on Friday, being the last trading day of the week and month on window dressing by fund managers and stockbrokers as they balance their trading account for the period. Also, there is hopeof more earnings reports pouring in as the March 31, 2019 official deadline for companies with December 31, 2018 year-end earnings reporting season draws to a close on Friday. We note also that notification of close period for first quarter 2019 earnings reports has started.

Investors look to government’s policy direction as the market faces low liquidity problems in the ongoing earnings reporting season, vis-à-vis market and economic fundamentals.
Given the drop in the prices of major blue chips in recent times, creating entry opportunities, we expect speculative trading to shape the market direction going forward.
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 political space and ongoing full year company earnings position and post-election market dynamics. 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 mixed company numbers, weak 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
https://investdata.com.ng/2019/03/influx-of-audited-2018-earning-amidst-quarter-end-window-dressing-on-ngse/