Market Update for Week Ended August 4 and Outlook for August 7-11
At the end of the first four trading days of the month of August, nation’s equity market closed up to continue four straight weeks of bull run, following which the Nigerian Stock Exchange (NSE) year-to-date gain increased to 39.26%.
Looking at the sectoral indices for the period, three sectors are outperforming the general market, while others still closed in the green, leaving only the second tier market’s NSE ASeM alone in the red. Year-To-Date market breadth across sectors remains strong and healthy.
Banking and Industrial sectors are leading, although the consumer goods sector has bounced back significantly since mid-July as revealed and supported by scorecards emanating from the sector.
Since July 31, 2017 was the statutory deadline for the submission of quarterly earnings reports by quoted companies that was within the period under review, were 37 listed companies made available their numbers. Indeed, the numbers to which the market reacted appropriately came mixed to the investing public, as some beat expectations, while others were disappointing, helping to keep the uptrend throughout the week after pulling back at the beginning of the week.
The volume index over the past week was 1.32 with buying position at 97% and 3% selling volume of the total transactions as consumer goods, low priced and high cap stocks remained the toast of investors and traders. This followed the continued reshuffling of portfolios by such investors and traders ahead of subsequent quarterly numbers and more positive economic data, especially amidst expectations that fiscal and monetary authorities will intensify efforts to sustain Nigeria’s recovery to boost economic and market fundamentals that will continue to attract more inflows into the system.
Meanwhile, the composite NSE All-Share Index for period gained 560.44 points to close at 37,425.15 points, from 36,864.71 points, after crossing the psychological line of 37,000 to a high of 37,476.69 and low of 35,444.00, representing 1.52% growth on a huge transaction volume. Similarly, market capitalisation for the period closed higher at N12.9tr from an opening value of N12.71tr, representing a 1.53% appreciation in investors’ portfolios position.
The top performing stocks table for the week was dominated by low and medium cap stocks, as investors, analysts and traders continue to digest the recently released company quarterly earnings reports, following which that are either disposing due to disappointing numbers, or taking position in companies with up-trending earnings that will support future rally and dividend at the end of the day.
Despite the slowdown in the weekly market breadth, upturn in the share prices of low and medium cap stocks pushed the NSEASI’s year-to-date return to 39.26%, just as market capitalisation appreciated by N3.78 trillion, representing a 39.75% gain from the year’s opening value.
Market breadth for the period was positive with number of advancers outweighing decliners in the ratio of 38:28 on a huge volume of trades to remain bullish in the four-day week, with Friday gain increasing the trending momentum thereby strengthening the up market.
International markets were mixed as oil commodity traders are exiting their future position as price continue to dwindle amidst political tension in developed economies and market due to comments by U.S President Donald Trump on world trade, North-Koen missile testing, Brexit as well as mixed corporate earnings.
Britain’s FTSE 100 and Germany‘s DAX closed up over the past week while Japan’s Nikkei and U.S market indexes were mixed despite the positive labour market data that shows 209,000 jobs were created in July, better than what economists expected, just as unemployment rate fell to 4.3%, while average hourly earnings increased by just 2.5%, compared to the amount a year ago, an indication that inflation can be contained.
In Europe, retail sales unexpectedly jumped 0.5% in June which was well above analyst expectations of 0.1%, even as preparations for the eventual exit of Britain from the zone continues to exact pressure on that countries economy, which is not unexpected. A pointer to this is the contraction in the British economy as shown in its Purchasing Managers’ Index which remains below 50 point. In Asia, China is expected to report strong growth in July, although a high trade surplus could spark problem with the U.S., given President Trump’s stance.
Back home, the All-Share Index opened the week on a negative note, losing 2.76% as investors took profit, while engaging in month-end portfolio rebalancing activities. This was reversed in the second trading day, when the NSE All-Share index notched 2.54%, beginning another uptrend that was sustained till Friday. In the four-days, the NSEASI gained 0.50%, 0.62% and 0.78% respectively to close the period higher at 1.52% gain.
The benchmark index and other sectoral indexes for the period closed the week in green, except for NSE Banking and NSE Industrial which were in red, after shedding 1.64% and 3.05% respectively, even as the NSE ASeM closed flat.
The week’s transaction, measured by aggregate volume and value, were up by 16.74% and 272.45% respectively to 2.58bn shares, from the previous week’s 2.21bn units, worth N114.12bn, as against previous week’s N30.64bn.
At the end of last week’s trading, C & I Leasing topped the advancers log with a gain of 44.93% to close at N1.00, driven by market forces; followed by Dangote Sugar’s 37.27% gain to close at N14.91 on impressive Q2 numbers, especially with plans by the directors to pay an interim dividend of 50 kobo per share. The decliners’ log on the other hand was led by Morison Industries, which lost 16.91% to close at N1.13 on market forces, ahead of the 12.4% slide by Red Star Express, which closed at N4.38 per share, following adjustment of its price for the 40 dividend proposed by its board at the end of its last financial year.
The market is expected to be mixed this week due to profit taking and portfolio reshuffling on the strength of the Q2 numbers released recently as analyst, investors and traders study the numbers to take trading and investing decision.
Bearing all these in mind, investors should position in stages in valued stocks with high upside potentials, despite their current prices on the exchange as many are still undervalued.