Investors Bet On FG’s Cabinet List, MPC Outcome, Earnings Reports, Amidst Liquidity Constraints

Market Update for July 22
The negative sentiment and selloff narrative on the Nigerian Stock Exchange (NSE) continued on Monday, the first trading session of the week, with the composite All-Share index closing lower to wipe clean previous day’s gain on an above-average traded volume.
The failure of the government to assemble a cabinet five months after President Muhammadu Buhari was re-elected and almost two months after his inauguration for a second and final four-year term in office shows the seeming confusion of the country’s leadership. This has continued to dampen investor confidence, just as the proposed reintroduction of Value Added Tax (VAT) charges on all capital market transactions is bound to negatively impact cost and returns on investment.

The VAT charge is billed to begin on Thursday, July 25, and could mean double taxation on investors who already pay VAT on their dividend which could further discourage investment and wealth creation through the trading of securities. This is a further threat to the already fragile economy.

We would not be surprised, judging from the President’s body language, that more of the Ministers who served in the previous tenure will be reappointed, and as such there will little or no element of surprise.
Meanwhile, it was a very volatile and mixed session as the NSEASI started marginally on the upside till the mid-morning before pulling back sharply by the afternoon after touching intraday low of 27,808.69 basis points from a high of 28,070.43bps. This was as investors anticipated more corporate earnings and outcome of the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) meeting.

Investors and traders will this morning react to the half-year numbers from Lafarge Africa Plc, which hit the market after trading hours on Monday. The numbers were not disappointing despite the mixed performance with flat top-line and significant improvement in the bottom-line, as it continues with the divestment from its South African operation (READ MORE).
Monday’s market technicals were negative and mixed, with higher volume traded than the previous day’s, amidst negative breadth. There was also a high selling pressure as revealed by Investdata’s Daily Sentiment Report, with the session’s ‘sell’ position at 100% of the total daily transaction volume index of 0.68.

The forces behind the day’s performance remained seriously weak, despite inching up, as Money Flow Index read 15.28 points, higher than previous day’s 6.39bps, indicating that funds are moving around some stocks, despite the continued selloff in high and low cap stocks in the phase of low liquidity in the market.

Index and Market Cap
At the end of trading, the benchmark NSEASI lost 110.81bps to close at 27,808.69bps after opening at 27,919.50bps, representing a 0.40% decline, while market capitalization shed N54.01bn, closing at N13.55tr, from its opening value of N13.61tr, which also represented 0.40% value loss.

Attention: If you haven’t signed up for Investdata buy and sell signal setup, don’t delay. We have just added another risk management feature and new favorite stocks of the most revered traders and investors in corporate Nigeria to our watchlist, these stocks are with double potentials. To become a member, send ‘YES’ or ‘STOCKS’ to the phone numbers below. Take advantage of this service to buy right and sell right during this portfolio reshuffling and repositioning ahead of Q2 numbers and fiscal stimulus.

The persisted decline was driven by selloffs in MTNN, Nigerian Breweries, Guaranty Trust Bank, Zenith Bank, Flour Mills, FBN Holdings, Oando, Nascon, Honeywell, and Transcorp Plc whose directors reported a less than expected half-year score-card (READ MORE), among others. This further intensified the negative position of the market, with the NSE’s Year-to-Date loss rising to 11.52%, just as YTD market capitalization gain dropped to N1.83tr, or 15.63%, above the year’s opening level of N11.72tr.

Mixed Sectoral Indices
The sectoral performance indexes were largely down, except for the NSE Banking and Insutraial goods that closed higher by 0.42% and 0.24% respectively, while the Insurance index led the decliners after dropping 1.18%, followed by Consumer Goods with 0.94%, just as oil/gas slipped 0.16%.

Market breadth remained negative as decliners outnumbered advancers in the ratio of 19:14; while market activities were mixed, with volume traded rising by 6.52% to 285.76m shares, from previous day’s 268.34m units, as transaction value fell to N2.24bn from the previous day N2.81bn. The session’s volume was driven by trades in financial services, ICT and Conglomerates stocks such as Courville Business Solution, Sterling Bank, UBA, Transcorrp, and Zenith Bank.

The best-performing stocks for the day were African Prudential and United Bank for Africa which led the advancers’ table with 8.82% and 8.18% gains respectively, closing at N3.70 and N5.95 per share, on improved numbers and low price attraction ahead of the expected interim dividend payout. On the flip side, NASCON and Consolidated Hallmark Insurance lost 10% and 9.65% respectively to close at N13.50 and N0.28 on selloff and profit.

Market Outlook
We expect the market to reverse in the coming days as more earnings are announced and depending on the outcome of the MPC meeting that would be announced today to determine whether bargain hunters will take advantage of the prolonged bearish trend and buy as the half-year earnings reporting season enters peak period. Discerning investors should target value stocks considering the current low valuation to position for dividend income and capital gain, especially as the market’s Price to Earnings ratio is 7.28x, which is well below the 11.1x average of its peers and a five-year average of 13.2x. This revealed value and high upside potentials for a rally.

They may also take into consideration the expected economic reforms as the government announces its much-awaited new cabinet, just as Central Bank of Nigeria (CBN) had rollout it plans to boost productivity and investment by instructing the banks to lend more to the private sector. This is aimed at reducing banks’ participation in government securities and lending more to the private sector to drive economic growth.
There is also the likely impact of portfolio repositioning for the second half of the year in the midst of expected Q2 numbers, especially banking stocks.

Take Action
The difference between you and others who are not aware of what I am sharing with you is ACTION. Take action that will transform your life throughout 2019 and beyond by getting the just concluded and life-transforming INVEST 2019 TRADERS & INVESTORS SUCCESS SUMMIT, CHART SUMMIT, and POST ELECTION BULLS & BEARS Home study pack (USB) that you can play on your phone, Laptop and Television set.
The events were a successful, insightful and educative outing that not only offered direction as to where investors should look for profitable trade in 2019 and beyond, insight into industries, sectors, and companies to seek worthwhile returns. What stocks should you buy? Grab the pack for the 10 Golden Stocks with the possibility of offering in 2019 multiples of what broader stocks do, coming out of this market correction environment.

Don’t sit on the Fence call or text Stock to 08028164085, 08032055467, 08111811223 now.

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/2019/07/investors-bet-on-fgs-cabinet-list-mpc-outcome-earnings-reports-amidst-liquidity-constraints/