NGSE capitalization Loss N581.22bn In Nov, As Blue-chip Stocks Suffer Heavy Casualty

Market Roundup for November

Once again, the Nigerian equity market as well as the economy was trailed by weak performance in the month of November, which was yet another bearish outing that extended the downtrend on the back of dwindling investor confidence and mixed economic fundamentals.

The combination of weak and mixed third quarter earnings, made worse by weak macro–economic indices that confirmed a slowdown reflected in the composite indices of the Nigerian Stock Exchange (NSE) for the month. The sectorial indicators point to stagnation in the economy, with many companies unable to grow their sales revenue in the recent corporate earnings reports, despite all the domestic and foreign borrowing and huge budgets since 2015.

These have not been helped either by the uncertainties now associated with next year’s general elections that has made the market close lower for the month under review, despite resisting decline for more than two weeks. During the period, the benchmark All–Share index side–trended, before giving up to sell pressure, after which it broke down support level to make lower lows on low demand for stocks.

Manufacturing activities in the current year continue has remained low, due to the declining purchasing power of Nigerians and dwindling productivity. This is despite the fact that Purchasing Managers’ Index for the period remained above 50 points, with November data at 57.9 from previous month’s 56.8, according to the Central Bank of Nigeria (CBN).

More specifically, the first three quarterly results of companies listed on the NSE generally reveal mixed performance in revenue among operators in consumer and industrial goods sectors. Most of them came below expectations, reflecting the impact of low economic activities and high cost of living and doing business. Another important factor is the resurgence of inflation. Expectedly, due to the festive period and likely implementation of the new minimum wage in the coming year, inflation is likely to remain within the two–digit region.

During the month, there were 21 trading sessions, with the market closing red on 13 of those days and up in eight, continuing a 10–month downtrend that impacted negatively on year–to–date return that stood at a loss position of 19.17%. This is attributable to factors mentioned above and the exit of foreign investors due to the high yield environment in developed markets. This has made the Nigerian stock market rank among the worst performing across Africa and indeed, the globe with many stocks on the exchange suffering huge losses, a situation that has however made many of them highly undervalued, offering high margin of safety for discerning investors.

Meanwhile, in the month of November, the NSE All–Share Index lost a total of 1,592.10 basis points, closing at 30,874.17bps after touching a high of 32,477.99bps and low of 30,545.20 within the period, compared to the 32,466.27 at which it opened. The closing figure represented a 4.90% decline during the month on a strong sell–market position that impacted on stock prices to sustain the downtrend.

Selling pressure of the total transactions for the period was 83%, and buying volume 17% to sustain the bear ascendancy in the last quarter of the year, while volume index for the period stood 0.79. Market capitalization dropped by N581.22bn to close lower at N11.27tr, from N11.85tr, representing a 4.89% value loss. The downtrend continues on lack of economic direction and the much needed positive information to trigger demand.

Transaction volume for the month was up by 10.57% to 5.44bn shares, as against the 4.92bn units recorded in the preceding month, while market breadth for the period was negative with the decliners outnumberingadvancers in the ratio of 65:22 to continue the bear transition, irrespective of attractive entry points and undervalue state of the equity market.

Sector Performance

The sectoral indexes performance chart above followed the path of the general market benchmark index, except for the NSE Insurance and NSE ASeM that closed on the up side. The bar chart shows that the NSE Industrial Goods and Premium indices drove the market the most in the month under review, with the former losing 15.05%, as a result of value loss in CCNN, Lafarge Africa, Dangote Cement and others that comprises premium index, while the NSE 30 followed with 6.22%.  Next were NSE Consumer good and banking with 6.04% and 5.60 % respectively. The oil/gas index also underperformed the composite NSE All–Share Index during the period, declining 4.56% to reflect the selloff and profit taking in Seplat, 11 plc, Eterna and Oando in that sector, while the NSE Pension and NSE Main–board indices dropped by 4.52% and 3.25% respectively. These, more than ever before, revealed investors’ apathy in blue–chip and dividend–paying stocks, as sentiments remain negative despite thelow Price–To–Earnings ratio attraction.

Best And Worst Performing

Best performing stocks for the period under view were Continental Reinsurance, which rallied on the strength of its expansion drive and mild improvement on the numbers, with positive sentiment. It gained 35.14% of its opening price, after the core investor– Continental Investment offered to buy–out minority shareholders. It was followed by healthcare company– GSK, which appreciated by 17.89; ahead of the 14.68% notch by another healthcare service provider– McNichols, while May & Baker closed 11.57% higher in a week its N2.5bn rights offer closed. Also, Chemical &Allied Products and Beta Glass were up by 10.14% and 9.98% respectively.  Low, medium and high caps that ranked high among the best performing stock table for the month included: Nahco with 9.09%; Nestle7.61%, Presco 7.06% and AXA Mansard, 6.32%; among others.

Best Performing Stocks in November
Securities Sector Open Close % Change
Continental Reinsurance  Insurance 1.482.0035.14
GSKHealthcare 12.3014.5017.89
McNichols Healthcare 0.410.4714.68
May & Baker Healthcare 2.242.5011.67
CAPIndustrial Goods 28.6031.5010.14
BetaGlassIndustrial Goods62.1068.309.98
NahcoServices 3.303.609.09
Nestle Consumer Goods1380.001,4857.61
PrescoAgric business 58.0062.157.36
AXA Mansard Insurance 1.902.025.32

Source; Investdata Research

The worst performing stock for the period was Diamond Bank, which shed 53.24% of its opening price, amidst its lingering crisis and reactions to its rumoured acquisition, which has been stridently denied. The crisis of confidence has also not been help by the way its chairman, Oluseyi Bickersteth resigned along with three other non–executive directors– Rotimi Olayiwola Oyekanmi, Mrs. Juliet Anammah and Mrs. Aisha Oyebode resigned. Add this to its weak earnings power that had led to non–payment of dividends for more three years and high Non–performing Loans. It was followed by Eterna, which lost 30.58% also due to mixed numbers and profit taking, as the company prepares to borrow for expansion. The share price of CCNN fell by 27.86%; Ikeja Hotel closed 25.99% lower for the month on serious profit taking, just as Lafarge Africa dropped 25.41% on the back of Q3 red account, that makes the stock more attractive at its trading 10  years low.

Worst Performing Stocks in November
Securities Sector Open Close % Change
Diamond BankFinancial 1.390.65–53.24
CCNNIndustrial Goods24.9518.00  –27.86
Ikeja HotelServices 2.271.68  –25.99
Lafarge AfricaIndustrial Goods17.5013.00  –25.71
Niger InsuranceInsurance 0.280.22–21.43
C & I Leasing Services 2.60    2.06–20.77
Union Diagnostic Healthcare ser0.300.24–20.23
NEMInsurance 2.932.35–19.80
AG Leventis Conglomerates 0.360.29–19.44

Source: Investdata Research

Technical View on Monthly Time Frame

The NSE Index action for the month remained in the bearish channel and below the 20 and 50–Day moving average on improved trade volume, while reflecting the selloff and negative sentiment for stock as market and economic fundamentals continued on a path of slowdown that is driving weak momentum and strong volatility. With the improving economic data so far in this last quarter and current trading pattern, ahead of Santa Claus and year–end rally in preparation for full year earnings reporting season in Q1 2019 after the presidential election, market technicals remain negative and mixed. This is likely to reverse into the new month with seasonal changes and low–price attraction ahead of year–end with funds gradually leaving developed market to emerging stock markets. 

Know the categories of stocks that will rally after the presidential election, if PDP or APC wins, and position before the market.  To know more on how to go about it join us at INVEST 2019 TRADERS & INVESTORS SUCCESS SUMMIT at Ostra Hotel & Hall, Alausa, Ikeja opposite NNPC Gas Plant. December 8, 2018.

This is the best way to start your financial success journey in 2019 in view of the prolonged market correction and the opportunity of a bull–run in the medium to long–term, the need to be a part of INVEST 2019, cannot be over–emphasized.

Our carefully assembled eminent speakers will address the following issues:

Pre–election year performance Review and post–election Investing opportunities – Ms Toyin F. Sanni, Group CEO of Emerging Africa Capital Group, an African provider of integrated financial services covering Advisory and Capital Raising, Trusts, Wealth Management and Investment Facilitation. She was until June 30, 2018, GCEO at United Capital Plc, a leading African investment banking and financial services Group providing capital financing solutions to African governments, companies, and individuals.

A lawyer and Fellow of the Chartered Institute of Stockbrokers, among others, she will discuss how, historically, the factors and  policies  that have influenced Nigeria’s stock market in an election year, implications for 2019 and how it would drive equity prices higher as recovery expectation continues.

Understanding the big picture of Budget Delays and Implications on the Economy/Stock Market  Alhaji Garba Kurfi, Managing Director of APT Securities & Funds Limited is a Fellow of both the Institute of Chartered Accountants of Nigeria (FCA) and the Chartered Institute of Stockbrokers (FCS). He is also a former council member of the Nigerian Stock Exchange.

Kurfi will address the importance of government’s yearly budget and its role in economic growth; impact of budget delays and implications on the economy; and how the N8.9tr post–election year budget will affect the economy and stock market. He will review the budget implementation style in the past three years, and the impact across board.

Simple Strategies for picking undervalued stocks With Fundamental & Technical Tools– Mr. Abdul–Rasheed Oshoma Momoh, Head, Capital Market, TRW Stockbrokers Limited, a graduate of the Ahmadu Bello University, Zaria; and Fellow Member of the Chartered Institute of Stockbrokers, is a certified Technical Analyst and guru in short term trading techniques.

Participants will learn how to read price actions and chart patterns like the professionals, for a do–it–yourself approach to investing. You will learn notice when professional traders are entering and exiting the market, in that way, you can “shadow” their trades and possibly ask questions! Participants will also learn how to find low priced stocks that are ready to break out; and why some low–priced stocks are better trade candidates than others.

Mastering Market Dynamics & Dividend Techniques For Income Growth in 2019– Mr. Ambrose Omodion, Chief Research Officer, InvestData Consulting Limited, is a Fellow of the Institute of Professional Financial Managers, UK; Associate Member of the Certified Pension Institute of Nigeria and a Certified Financial Manager. He is a South Africa and UK–trained stock market analyst, technician and Convener of Traders & Investors Summit.

A regular guest on Rainbow Fm 94.1 (Friday 2.30pm–3.30pm) and financial market columnist at daily independent newspaper, Omordion will reveal how to take advantage of seasons, patterns and cycles to invest profitably. Participants will also see how market cycles support market reactions to earnings; and how to use earnings calendar, trend, surprises and quality of numbers in making profitable investment decision in 2019 and beyond.  He will also take participants through companies with a high to grow dividend payout relative to earnings power and price, and those from which to expect a cut.

Psychology of Equities Trading For Managing Positions & Money –Engr. Ekwueme Mike Anaydibe, Head, Fixed Income Sales at TRW Stockbrokers Limited a ‘seasoned engineer,’ has developed and applied econometric techniques to the Nigerian financial & secondary commodity markets. He has successfully created ‘timing & trend’ models of the Nigerian Stock Exchange, for example, based on technical analysis of ‘Real Nigerian Investors’ Behavior & Sentiments.

Participants will learn how to protect their gains when trading. You will learn early warning signs of when a trend is about to turn against you; know when it’s safe to stay in a trend or jump out; how to see optimal buying points in oversold conditions; and how to creatively manage money and positions to minimize risk

Nigeria’s Post Election Economy & 2019 Sectoral Analysis, Mr. Razaq Abiola, Economist/Head, Investor Relations and Portfolio Investment at United Bank for Africa Plc, is responsible for managing the equity and debt capital of the Group, besides overseeing its private equity investments. As the Group’s Economist, he provides views on the economy of key African markets where UBA operates, with focus on the ALM implications of key macro expectations and events in these economies and sectors.

Abiola will give expectations and outlook for the Economy in 2019 and impact of government policies on sectors in the post–election year to boost industry performance, economy and stock market, looking at the expected reforms that come with new dispensation. Also, he will look at sectors to watch going into 2019 and beyond.  

Picking the Right Stocks for Financial Independence and to Retire Rich – Mr. Mike Uzor, Managing Director of Datatrust Consulting Limited is financial analysts and consultant. Holder of Master of Business Administration from Kensington University, California has traversed core areas of the financial market– banking, stock brokerage, pension and marketing communications. His practical knowledge and experience from these equipped him to author How to Buy & Sell Shares in Nigeria, a practical guide.

At the Invest 2019, he will show you how to take advantage of seasons, patterns and cycles to plan for a successful retirement, knowing that some events occur once in two, four and seven years. Participants will also learn criteria for choosing right stocks for retirement in financial freedom; the sectors and how to maximize the opportunity of the current low prices to select right.  

As benefits from the Summit, participants will get free Technical Analysis Navigators that combines timing & trend’ models for trading Nigerian Stocks, Forex, Derivative and Commodities. Facilitators will discuss Stocks to Watch, as well as learn the 10 Golden Stocks To Buy in 2019.

Source: TRW Stockbrokers, December 3, 2018