Zenith, GTB, NB, Guinness, FO, Hit New 52-week Low As Portfolio Reshuffling Continue

Market Update for the week ended August 9 and Outlook for 14-16
Any further doubt about the sustained negative sentiments in the nation’s stock market increased last week due to the myriads of challenges militating against investor confidence, domestic productivity, and consumption.
These kept the key performance indices on the downtrend, just as other markets across the globe suffered decline due to uncertainties surrounding arising from the raging battle for supremacy between the U.S and China, the world’s biggest economies. The trade dispute has so far entered another level capable of slowing down global economic growth.
The trade war is expectedly already having multiplier effects on the price of crude oil, following which it closed the period under review at a six-month low of $57.82 per barrel, which is already below the $60pb benchmark oil price set for Nigeria’s 2019 budget.
Meanwhile, the chairman of Nigeria’s Revenue Mobilization, Allocation and Fiscal Commission (RMFC) recently announced plans for a committee to review the current sharing formula among the three tiers of government, considering the reality on the ground today and the national economic situation (READ MORE).
Also, the expected inauguration and portfolio allocation to cabinet members hold August 19 and 20, even as recent moves and initiatives by the Central Bank of Nigeria (CBN) to boost lending to the productive sector of the economy, thereby enhancing consumer protection in the financial market.
These are likely to trigger positive sentiment going into the future.

Movement Of NSEASI
At the end of last week’s trading, the composite All-Share index of the Nigerian Stock Exchange (NSE) recorded mixed performance, with the first trading session closing positive, despite the bearish sentiment. This was reversed on Tuesday with the index losing 0.51% on selloffs and the dwindling confidence, a situation that was sustained at midweek when the NSE benchmark index shed 0.42% as the selling pressure persisted. Thursday’s performance close marginally up at 0.05%, before nose-diving again on Friday, when the index fell by 0.43%, bringing the week’s total loss to 1.17%, compared to the previous week’s 1.03% decline.
The market gave way to selling pressure as highly capitalized stocks lost value, pushing the NSE year-to-date loss to 13.12%; just as market breadth stayed negative with decliners outnumbering advancers in the ratio of 43:12. In the midst of this, 16 stocks touched new 52-week lows. They are Zenith Bank, Guaranty Trust Bank, FBNH, UBA, Eterna, NB, Guinness Nigeria, Forte Oil, Law Union, United Capital, Livestock Feeds, UACN Property, Continental Reinsurance, Jaiz Bank and Dangote Sugar, while just two stocks- BOC Gases and Dangote Flour, made new year high. Dangote Flour’s rise was driven by the ongoing bid by Olam International for its entire five billion ordinary shares at a reviewed price of N120bn (READ MORE).
As usual, low and medium cap stocks topped the week’s advancers’ gainers’ table, while high cap and interim dividend stocks led the decliners on improved traded volume higher than the previous week transactions as low liquidity prevailed. The continued decline may not be unrelated to the fact already stated, in addition to the fact that investors may not be expecting anything significantly different from what has been seen so far from the Q2 score-cards.
The momentum behind the week’s performance was weak and flat as shown by Money Flow Index at 13.57 basis points, compared to 13.57bps in the previous week, indicating that funds left some stocks and the market, despite the indecision among many market players. Also, sentiments remained negative, with a sell position at 100% and ‘buy’ volume, 0% on a transaction volume index of 0.66.

NSEASI Weekly Time Frame
The negative outlook and trend seem to have worsened as many stocks touched their new 52-week low amidst portfolio reshuffling on the strength of the just concluded earnings power of the listed companies. Despite the cautious trading, the low prices of stocks present opportunity for discerning investors to take the stage by stage buying to position for the weeks ahead. However, the anticipated reversal will be a function of liquidity and economic policy direction.
The current NSEASI chart pattern remains mixed and somehow, despite the Bollinger band giving a signal as the index continues to trade on the lower band and below its 20-Day Moving Average, as Relative Strength Index reads ‘oversold’ at 28.59. But then, Money flow at 13.57 points remains weak.

Bearish Sectoral Indices
All sectoral performance indexes for the week were in red, except for the NSE Industrial goods that closed higher by 1.3%, while the NSE banking index led the decliners after losing 6.1%, followed by the NSE Insurance with 3.9% and next were NSE Oil/Gas and Consumer goods with 1.6% and 0.7% respectively.
Market activities for the period were mixed as volume traded was up by 42.11% at 1.08bn shares, from the previous week’s 759.27m units, while transaction value dropped by 14.46% to N12.07bn, from prior week’s position of N14.04%
CCNN and Dangote Flour were the best-performing stocks for the week, as they topped the advancers’ chart with 13.36% and 11.35% gains respectively to close at N14.0 and N20.60 per share on improved Q2 numbers and market forces. On the flip side, Continental Reinsurance and Law Union & Rock Insurance lost 19.19% and 17.02% respectively, closing at N1.39 and N0.39, on selloff and profit-taking.

Market Outlook
We expect the mixed performance to continue after the public holidays declared for Monday and Tuesday, even as the market remains dicey due to rising global geopolitical issues, local political risk, and weak economic fundamentals. Also, portfolio reshuffling and repositioning ahead of inflation data from the Nigeria Bureaus of Statistics (NBS), as discerning investors take advantage of low valuation to buy into interim dividend stocks and undervalued equities.
Investors may also take into consideration the expected economic reforms as government announces its much-awaited new cabinet, just as plans by the CBN to reduce banks’ participation in government securities is expected to boost private-sector lending to drive economic activities and investment.
Profit-taking may persist in highly capitalized stocks due to portfolio restructuring. Hence, overall market performance will expectedly remain mixed amidst positive sentiments and negative breadth.
Market players should maintain a cautious outlook due to low confidence, liquidity and the wait for major economic triggers. Hence, we advise investors to trade cautiously in the short-term, with their gaze fixed on blue-chip stocks that are selling more than 40% below their 52 weeks high. As we look out for a positive catalyst to drive market recovery.
That notwithstanding, we would not overlook the possibility of a bargain-hunting motive supporting positive performance, especially with many fundamentally sound stocks remaining underpriced. With the prices of major blue chips continuing to drop in recent weeks, we expect speculative trading to shape the market’s direction this week, despite the seeming negative outlook.


Ambrose Omordion
CRO|Investdata Consulting Ltd
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