Equities market to trade bullish on bargain hunting despite 2-day downtrend

D E S P I T E TWO DAYS of successive losses in the market last week, analysts say they expect a rebound this week as investors seek for bargain hunting opportunities. The analysts’ assumptions are hinged on supportive positive macroeconomic fundamentals as well as opportunities for market entry into good caps, which have depreciated in the long bear run up to the last two weeks.

The analysts say they expect the market to sustain the bullish run to the end of the third quarter before the outflow of hot money begins in the run up to the general elections of 2019. Some specifically, indicated the election fears would not affect sentiments and that the market would trade within reasonable levels right up to the end of the year if the campaigns don’t turned dirty and nasty.

The analysts say growth in the economy is anticipated to strengthen as commodity prices firm up and domestic demand gradually gains ground, which would impact the equities market, adding that the usual downside risk of the 2019 election would not count for much. They however have doubts on the market performing to the level of 2017. A review of last week trades indicates sustenance of the bullish trend of the prior week, which they envisaged would be extended to this week.

Specifically, the bourse’s benchmark index, the 14 BUSINESS A.M. MONDAY, JUNE 18 – SUNDAY, JUNE 24, 2018 FINANCE & INVESTMENT CAPITAL MARKET Stories by Adesola Afolabi Equities market to trade bullish on bargain hunting despite 2-day downtrend NSEASI rose 0.7 percent week-on-week (w-o-w) to settle at 38,928.47 points while year-to-date (YTD) and month-to-date (MTD) return strengthened to 1.8 percent and 2.16 percent respectively. The positive performance in the week was largely driven by bargain hunting in NESTLE (+4.5%), STANBIC (+3.2%) and SEPLAT (+2.7%). As a result, market capitalisation gained N150.9 billion to close N14.0 trillion. Market activity level for the week was mixed as average volume traded improved 24.1 percent to 434.2 million units while average value traded weakened by 28.6 percent to N4.5 billion w-o-w.

A total turnover of 1.738 billion shares worth N18.462 billion in 14,790 deals was traded during the week under review in contrast to a total of 1.749 billion shares valued at N31.183 billion that exchanged hands previous week in 24,604 deals. The financial services industry led the activity chart in volume terms with 1.170 billion shares valued at N9.695 billion traded in 7,809 deals; thus contributing 67.35 percent and 52.51 percent to the total equity turnover volume and value respectively.

The services industry followed with 293.492 million shares worth N733.407 million in 531 deals. The third place was occupied by Consumer Goods with a turnover of 154.093 million shares worth N4.997 billion in 3,002 deals. The top traded stocks by volume were IKEJAHOTEL (280.3m), UBA (189.1m) and AFRIPRUD (179.4m) while GUARANTY (N3.3bn), UBA (N2.1bn) and DANGSUGAR (N1.9bn) were the top traded stocks by value.

The market had begun the week on a bullish note as the ASI advanced 0.5 percent and 0.8 percent on Monday and Tuesday respectively on the back of gains in GUARANTY, FBNH, NIGERIAN BREWERIES, DANGCEM, NESTLE and SEPLAT. However, by midweek, this upward trend was reversed as the benchmark index shed 0.3 percent on Wednesday before further declining 0.3 percent on Thursday as investors took profit in market bellwethers ahead of the holiday season.

Performance across sectors was mixed as three of five major indices advanced w-o-w. The oil & gas index was the top performer, up 3.8 percent w-o-w, due to gains in MOBIL (+10.2%) and SEPLAT (+2.7%). The insurance and banking indices trailed, closing 2.7 percent and 0.3 percent higher in the review period, as a result of buy interest in EQUITYASSURE (+20.0%), MANSARD (+6.0%), NEM (+6.0%), UBN (+10.7%) and ETI (+0.8%). On the other hand, consumer and industrial goods indices closed in the red, down 0.8 percent and 0.1 percent wo-w respectively, dragged by losses in NIGERIAN BREWERIES (-6.8%), INTBREW (-5.3%), WAPCO (-1.8%), CCNN (1.8%) and DANGCEM (-0.1%). Investor sentiment as measured by market breadth weakened to 0.8x (compared to 1.4x recorded prior week) as 33 stocks advanced against 42 decliners.

The top performing stocks for the week were PRESTIGE (+39.1%), JAPAULOIL (+31.0%) and EQUITYASSUR (+20.0%) while MBENEFIT (-16.2%), NEIMETH (-9.1%) and ETERNA (-8.7%) were the worst performers. ETPS Also traded during the week were a total of 62,392 units of Exchange Traded Products (ETPs) valued at N1.004 million executed in 13 deals, compared with a total of 202,916 units valued at N1.168 million that was transacted previous week in 19 deals. Bonds A total of 9,850 units of Federal Government valued at N9.999 million were traded in the course of the week in 10 deals, compared with a total of 10,561 units valued at N10.381 million transacted previous week in 20 deals. NASD OTC Activities at the NASD OTC Market ended the week with the NASD USI decreasing by 0.9 percent, to close at 660.03 points.

This was in contrast to 666.24 points recorded last Friday. Consequently, total market capitalization shed 1 percent last week, closing lower at N446.65 billion compared to N450.86 billion a week ago. Global markets Mixed trading remained the theme across certain global markets. Proceedings in the European market (FTSE 100: +0.88 percent; Euro Stoxx 50: +1.84 percent) were bullish, while sentiments were mixed in US (DJIA: -0.04 percent, S&P 500: +0.21 percent) and Asia (CSI 300: -0.17 percent; Nikkei 225: +0.19 percent). This was hinged on monetary policy decisions, geopolitical developments, and waned G-7 trade jitters. Meanwhile, gains were sustained across emerging markets (MSCI EM: +0.03 percent), on the back of gains in India (+0.44 percent), which outweighed the losses in China and Brazil (-1.25 percent), while the bears resurfaced in frontier markets (MSCI FM: -1.00 percent), following losses in Morocco (-0.93 percent) and other regions which offset gains in Nigeria (+0.67 percent) and Kenya (+0.87 percent).