Investors Look To Q1 Earnings, After NGSE Bleeds 9.27% Post-Presidential Poll

Market Update for April 3
The crises of confidence and low liquidity that have seriously hit the Nigerian equity market are daily becoming more by the day. At the end of midweek’s trading activities, for example, the composite Nigerian Stock Exchange All Share index became even more bearish on a selling pressure as revealed by Investdata daily sentiment report showing a sell volume of 99% and buy position of just 1% of the total daily transaction volume index of 1.47.

This signals real sell off, at a time the market had suffered three back to back losses making entry attractive for long-term investors. However, traders should be very cautious, because the general market direction has influence on your fundamentals and technical analysis in any market cycle.

Although, the government had dominated the capital market in the last four years raising one fund or the other, its policies or posture has not supported the market and the economy at large. Its constant borrowing via bond issuance, among others, have crowded out the private sector, due to the high rate, making it easy for financial institutions and foreign investors readily provide risk-free funds at the detriment of the economy.

Over the last four years, the market has recorded losses thrice in 2015, 2016 and 2018, up only in 2017 due mainly to introduction of the CBN’s Investors and Exporters window to manage the forex market. This supported relative stability in the Naira’s exchange rate and attracted fund after the market suffered three straight years of losses which made equity prices attractive. Recall that equity prices had mostly become grossly undervalued at the time, just as they are today. Since after the presidential and National Assembly elections on February 23, the NSE All-Share index have declined by 3,031.42 basis points from 32,700.12bps on February 25, to 29,668.70bps by the end of Wednesday, April 3, representing 9.27% loss. Within the period, market capitalisationlost N1.05tr, from N12.19tr to N11.14tr, which represents 8.61% down. The difference in due to the listing of Lafarge Africa’s right issue and Access Bank merger scheme with Diamond Bank.

The NSE index had a tough day on Wednesday, as it opened the session on a sharp sold off in the morning which lasted throughout the day to breakdown the psychological line of 30,000 mark and a couple of support levels. It touched intraday low of 29,665.78bps from a high of 30,243.71bps on a high traded volume to close the day lower. The continued selloff in banking, insurance and industrial goods stocks may push the index below its January 9 strong support level of 29.336.80bps. This extended 5-wave corrective move may also usher in recovery any moment from now.

The momentum behind the day’s market performance were very weak, as shown by money flow index at 7.55 points, from previous day’s 10.77bps. This is indicating a fundamental problem of lack of fund, as smart money had left the market after taking it up few weeks to the general election.

Index and Market Cap
At the end of midweek’s trading, the All Share Index lost 558.04 basis points to close at 29,668.73bps, from an opening figure of 30,226.77bps, which represented a 1.85% decline. Market capitalization shed N209.6bn, closing at N11.14tr, from its opening value of N11.35tr, representing 1.84% depreciation in value.
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Midweek downturn was driven by selloffs in stocks like: Dangote Cement,Guaranty Trust Bank, Zenith Bank, UBA, UACN, FBNH, Dangote Sugar, Dangote Flour, Eterna, Access Bank, CCNN, Wema Bank and Transcorp. This impacted on Year-to-Date loss, extending it to 5.61%, while market capitalization is down by N564. 47bn, or 4.94%, from the year’s opening level of N11.72tr.

Mixed Sector Indices
The sectoral performance indexes were largely down, except for the NSE Consumer goods and Oil/Gas that closed higher by 1.20% and 0.26% respectively. Market breadth was negative as decliners outweighed advancers in the ratio of 26:8.
Market activities in volume and value were up by 43.54% and 24.83% respectively, to 542.58m shares worth N5.66bn from previous day’s 376.95m units valued at N4.54bn.Volume was driven by financial services stocks like: FCMB, Sterling Bank, FBNH, Access Bank and Guaranty Trust Bank.

Nigerian Breweries and Cornerstone Insurance were the best performing stocks for the day, gaining 5.45% and 5% respectively to close at N60 and N0.21 per share on the strength of market forces. On the other hand, Consolidated Hallmark Insurance and Access Bank lost 10% each, closing at N0.27 and N5.85 each,as the market sentiment.

Market Outlook
We expect a slowdown in the current trend as players reposition for Q1, which will help give direction into how this year could turn out after seeing the 2018 financials. We note also that there are more company’s notifying the NSE of their closed period for first quarter 2019 earnings reports.

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.

Meanwhile, we greatly appreciate participants in the Abuja Invest 2019 Post-Election Bulls & Bears held on Saturday, March 23.
The 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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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 off profit position out of fear
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• Do small trade size or invest small amounts because you’ve just suffered huge loss, or
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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 strategiesto 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.

TAKE ACTION
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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/investors-look-to-q1-earnings-after-ngse-bleeds-9-27-post-presidential-poll/