MPC outcome to provide direction as earnings fail to move market back to green
Steve Omanufeme is Businessamlive Managing Editor.
You can contact him on steveo@businessamlive.com with stories and commentary.
The outcome of the upcoming monetary policy meeting, the first in the year, may provide tonic for investors to move the market, which has lingered in the oversold region, back to green in the near term.
The lack of clarity in the fiscal and monetary policy directions since the beginning of the year has weighed on market sentiments despite the continued deceleration in interest rate, according to analysts.
To this end, most are projecting another round of bargain hunting in the short term immediately the outcomes of the monetary authorities meeting are known before the onset of volatility that trails pre-election jitters later in the year.
The market has been largely suppressed since the beginning of March as overall market performance as indicated by the NSEASI continued to trend south despite decent earnings declaration by companies Specifically, bellwether counters like GUARANTY, NESTLE, DANGCEM, NB have all seen lackluster market reactions from the dates the companies filed their earnings.
Consequently, year-to-date (YTD) return has moderated from 16.0 percent as at 31st January 2018 to 8.5 percent as at 29th March 2018.
“The reasons are not far-fetched; the earnings declaration session fell at a time when the market was experiencing correction from the January 2018 rally when the ASI emerged as one of the best performing markets globally,” analysts at United Capital noted, adding that 9M-17 earnings had given a good indication of the magnitude of full-year earnings declaration and investors appeared to have priced this into their buying decisions early in the year.
To this end, FY-17 earn ings declarations were not sufficient to drive the market back to the green region.
Review of last week trades
A review of last week trades indicates that total turnover of 1.541 billion shares worth N16.647 billion in 18,805 deals were traded by investors in contrast to a total of 2.328 billion shares valued at N28.927 billion that exchanged hands previously in 25,530 deals.
The financial services industry (measured by volume) led the activity chart with 1.024 billion shares valued at N10.946 billion traded in 11,019 deals. It thus contributed 66.44 percent and 65.75 percent to the total equity turnover volume and value respectively.
The consumer goods industry followed with 213.704 million shares worth N3.053 billion in 2,693 deals. The oil and gas industry occupied the third place with a turnover of 158.643 million shares worth N908.260 million in 1,897deals.
Trading in the top three equities namely – Zenith Bank Plc, Champion Breweries Plc and Skye Bank Plc (measured by volume) accounted for 485.832 million shares worth N5.851 billion in 2,221 deals, contributing 31.53 percent and 35.15 percent to the total equity turnover volume and value respectively.
Index movement
The NSE All-Share Index and Market Capitalization appreciated by 0.08% to close the week at 41,504.51 and N14.993 trillion respectively.
Similarly, all other indices finished lower during the week with the exception of the NSE Premium, NSE Consumer Goods, NSE Lotus II and NSE Pension Indices that appreciated by 1.15%, 1.73% 1.58% and 0.34% respectively (See summary of Index movements in the table below):
Summary of price changes
Forty (40) equities appreciated in price during the week, higher than thirtythree (33) of the previous week. Forty (40) equities depreciated in price, lower than forty-nine (49) equities of the previous week, while ninety-one (91) equities remained unchanged higher than eighty-nine (89) equities recorded in the preceding week.
Supplementary listings
* Equity
The Exchange listed the additional volume of 836,983,125 ordinary shares of Morison Industries Plc. on its daily official list Monday, March 26, 2018. The additional shares arose from Morison rights issue of 836,983,125 ordinary shares of 50 kobo each at N0.60 per share on the basis of 11 new ordinary shares for every 2 ordinary shares held as at Friday, August 25, 2017. With this listing of 836,983,125 ordinary shares of 50 kobo each, the total issued and fully paid up shares of Morison has now increased from 152,178,750 to 989,161,875 ordinary shares of 50 kobo each
Price adjustments
* The price of GUARANTY TRUST BANK PLC was adjusted on March 28, 2018 for a dividend of N2.40 as declared by the board of directors. The last close price was N46.00, hence the ex-div price N43.60.
* The price of Stanbic IBTC Holdings Plc. was adjusted on March 29, 2018 for a dividend of N0.50 as declared by the board of directors. The last close price was N48.00, hence the ex-div price N47.50.
Exchange trade products (ETPs)
Also traded during the week were a total of 15,293 units of exchange traded products (ETPs) valued at N254,840.00 executed in 16 deals, compared with a total of 4,165 units valued at N78,276.06 that was transacted last week in 15 deals.
Bonds
A total of 21,583 units of Federal Government Bonds and one State bond valued at N22.868 million were traded this week in 16 deals, compared with a total of 5,152 units valued at N4.562 million transacted last week in 24 deals.