Investors Review Portfolios On NGSE, Amidst Depressed Half-year Earnings Reports, Poor Liquidity

Market Update for July 30
Stock prices were pulled further down on the Nigerian bourse Tuesday, as volatility continued due to the lingering low liquidity and the prevailing confidence crisis arising from the political risk and unwavering insecurity situation in the country, all of which worsened the country’s already unfriendly business environment and investment space. These have altogether manifested in the mixed and weak half-year earnings reports from quoted companies which have fueled the negative sentiments, wiping away marginal gains from a positive outlook on Monday.
The selling pressure in major sectoral indexes was also due to the mixed and disappointing earnings from players in these sectors, even as scorecards from the banking industry have been weak and mixed, with the exception of interim dividend payers who traditionally audited their half-year reports that are yet to release their numbers.

The consumer goods and oil/gas earnings were weak and below market expectation, except for few companies that posted above-average performance for the half-year. The impressive performance of Lafarge Africa and Cement Company of Northern Nigeria; in addition to the shareholding structure of the companies in this sector have supported the industrial goods index. The insurance index has stayed relatively stable on the strength of the planned recapitalization exercise in the industry, even as half-year numbers have been mixed.
Notwithstanding the disappointment various expressed over the ministerial list for which the investors were disappointed, all 43 nominees have been cleared by the Senate. All eyes are now on President Muhammadu Buhari to assign them portfolios so that implementation of the 2019 budget can commence immediately, as they settle down for the business of governance and policy formulation.
Meanwhile, crude oil prices extended its rebound on Tuesday amidst the prospects of a lower rate and the potential of the U.S-China trade deal providing a brighter outlook for oil demand on the horizon. The hope is based on the influence of oil price movements on the Nigerian stock market, economy, and its external reserves.

The benchmark Nigerian Stock Exchange (NSE) All-Share index started Tuesday on a marginal upside position as the end of the month window dressing moves lasted to till midday before pulling back by early afternoon with more disappointing and mixed earnings hitting the market. This pushed the index down to intraday low of 27,814.13 basis points from a high of 28,028.27bps, before retracing up slightly to close the session lower at 27,820.57 on below traded average volume.

Tuesday’s market technicals were negative but mixed, as volume traded was higher than the previous day’s, amidst negative breadth and sentiment as revealed by Investdata’s Daily Sentiment Report of ‘sell’ volume at 97% and buy position of 3% total daily transaction volume index of 0.67.
The impetus behind the day’s performance remained weak, as Money Flow Index read 21.41 points, lower than previous day’s 28.26bps, indicating that funds left some stocks and the market as selloff resume among the high and low cap stocks at the peak of earnings season and month-end.

Index and Market Cap
At the end of Tuesday trading, the composite index shed 129.79bps to close at 27,820.57bps after opening at 27,950.36bps, representing 0.46% decline, just as market capitalization lost N63.25 billion to close at N13.56 trillion from N13.62tr, which also represented 0.46% depreciation in value.
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 decline was driven by selloff in highly capitalized stocks like Nestle Nigeria, Guaranty Trust Bank, Zenith Bank, Nigerian Breweries, Stanbic IBTC, UBA, Access Bank, and FBN Holdings, which pushed the NSE’s Year-to-Date loss to 11.49%, just as YTD market capitalization gain drop to N1.52 trillion or 15.81% from the year’s opening level of N11.72tr.

Mixed Sector Indices
The sectoral performance indexes were largely bearish, except for the NSE Insurance and Industrial goods that closed 0.02% and 0.57% higher respectively, while the Consumer goods index led the decliners’ after losing 2.07%, followed by Banking and Oil/Gas with 0.72% and 0.16% respectively.

Market breadth turned negative as decliners outnumbered advancers in the ratio of 20:11; market activities were up in traded volume and value by 66.7% and 101.23% respectively to 155.21m shares worth N2.23bn, from the previous 93.11m units valued at N1.11bn. Volume was driven by trading in financial services stocks such as Guaranty Trust Bank UBA, Zenith Bank, FBNH and African Alliance Insurance.
The best-performing stocks for the day were Mutual Benefit and Ikeja Hotel that topped the gainers’ chart with 10% and 8.96% respectively, closing at N0.22and N1.46 per share, on market forces. On the flip side, Japaul Oil and Nigerian Breweries lost 8.72% and 8.33% respectively to close at N0.21 and N55.00 on profit-taking and unimpressive earnings.

Market Outlook
We expect a positive outing being the last trading day of the month as traders balance their trading account and interpretation of earnings reports released so far continued ahead of more earnings in expectation as bargain hunters take advantage of the prolonged bearish market, just as the half-year earnings reporting season peaks. 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 7.23x, which is well below the 11x average of its peers and a five-year average of 13.x. This revealed value and high upside potentials for a rally.
They may also take into consideration the expected economic reforms as 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.


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/poor-liquidity-weak-transaction-value-volume-still-as-investors-digest-q2-earnings/