Equity prices on the floor of the Nigerian Stock Exchange were on the downtrend last week, despite news of the second consecutive monthly decline in the Consumer Price Index (CPI) or inflation rate and improved consumer confidence index released during the week.
The decline is attributable to market players and investors taking time to digest the recent full year results and share price adjustments by companies that recently announced dividend payment for shareholders.
The drop in NSE indices did not also take cognizance of the positive economic data that seem to be pointing to recovery, amidst expectation that the Q1 GDP numbers to be published on May 30, 2017, according to the National Bureau of Statistics (NBS) calendar as published on its website, would trail the same path.
It is expected that the commitment of the Central Bank of Nigeria (CBN) to stabilized prices in line with its core mandate, will be complemented by the passage of the 2017 Appropriation Bill now before the National Assembly without further delay. These would expectedly lead to making liquidity available in the financial markets, including foreign exchange to meet the demand of foreign investors who want to cash out their dividend income. If sustained, this would encourage inflow of funds over time, rather than capital control that will discourage foreign direct and portfolio investors.
Also, stock prices are yet to look up in expectation of Q1 earnings reports that would affect the market positively or negatively, especially now that the dicey month of May is around the corner were traders selloff to return in October. This means that money management in trading and investing becomes very important, to know how to move from one investment window to another in search of a safe heaven or better returns.
The composite NSE All-Share Index shed 236.51 points to close the week at 25,510.01 points, from an opening figure of 25,746.52 points, representing a 0.92% decline for the period on a higher volume of trade, compared to previous week. The volume index of total transactions for the week was 1.06 as buying position for the period was 23%, while selling volume was 77% to halt the two-week bull transition. Similarly, market capitalisation for the period closed lower at N8.83tr, from an opening value of N8.91tr, representing a 0.92% erosion of investors’ capital.
Topping the advancers log for the week were low cap stocks as investors adopt new strategies, going for low priced stocks with value, especially at a time when the low cap are now paying dividend despite the gloomy economy in 2016. Also, the volatility of these stocks are relatively low.
The loss recorded across all the sectors during the week further pushed the NSEASI’s year-to-date negative position to 5.08%. Also within the same period, the loss in market capitalisation increased to N 415.67billion, representing a 4.76% decline from the year’s opening value.
Market breadth for the week was negative and weak as the number of decliners outweighed advancers in the ratio of 37:13 on improved volume of trades that were bearish on strong accumulation by smart money ahead of the Q1 2017 performance scorecards.
Stock markets across the world were mixed to close lower, reflecting the unstable state of the global economy and markets that had led to underperformance in some markets which has triggered cautious trading among investors as they run for safety. There is also unexpected socio-economic and political factors now unfolding across the global, especially concerns over North Korea and Donald Trump’s unexpected and even shocking comment that the US$ is becoming over-valued, irrespective of the headwinds.
The major US indexes moved lower in the four-day trading week amid President Trump comments, first quarter earnings beating expectations with the highest and fastest growth rates since 2011.
Japan’s Nikkei, Germany‘s DAX and Britain’s FTSE 100 were down over the same period, as fear of foreign policy risk and uncertainties around the new development of missiles attack here and there, even as China has warned that the drum of war may lead to dare consequences at the end. All these are affecting investor confidence in different regions.
In Europe, the successful elections in the region are boosting investor confidence as economic data are looking up despite ongoing moves by the UK to leave the zone.
In Asia, it seems China’s economy is looking up as revealed by its recent GDP of 6.9% growth that beat expectations, driven largely by the government’s infrastructure spending and an upbeat housing market.
Back home, the index opened the week on a negative note, losing 0.47%, sustained in the following trading session with a drop of 0.54%, which was reversed in the remaining trading sessions of the week with marginal gain of 0.07% and 0.05% respectively, bringing the week’s cumulative loss to 0.92% on an improved demand for stocks in the mood of positioning for Q1 as mentioned earlier.
The composite index and all sectoral indices for the period closed lower, except for the NSE Asem that was flat.
The week’s total market activities, measured by aggregate volume and value rose by 51.36% and 3.60% respectively to 1.19bn shares from 786.18m shares worth N6.04bn from N5.83bn. This was in contrast to the closing levels of previous week.
In the week under review also, a total of 1.19bn shares valued at N6.04bn were traded in 11,820 deals, compared with 786.18m shares worth N5.83bn, exchanged in 14,343 deals in the previous week.
During the week, the share prices of Dangote Sugar, FCMB and Glaxo Smithkline Consumer were adjusted for dividend. Mansard Insurance notified the exchange of its investment a 150-bed hospital with other partners.
Fidelity Bank and C&I Leasing led the advancers’ log with 21.43% and 14.29% respectively to close at N1.02 and N0.64, this was driven by dividend recommendation, while the flip side was topped by Dangote Sugar and FCMB Holdings, which suffered 14.29% and 12.17% decline to close at N6.00 and N1.01 each respectively.
The market this week is likely to look up, due to expected earnings release of more Q1 financials that are likely to hit the market with some surprises and disappointments.
Again, the time to combine technical and fundamental analysis for your trading decisions is now, to enable you know the support and the resistance levels.
Train yourself and study to know the new approach to adopt at this point and going forward, get your comprehensive short term trading pack.
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Eterna, Fcmb, Presco, Aiico and Access Bank.