Equities Lose N326bn As Investors Await Full-Year Results

Equities on the Nigerian Stock Exchange (NSE) lost N326billion in January as investors await the release of the full year results of companies for the period ended December 31, 2018.

When compared to January 2018, with a gain of 13.71 per cent, the stock market in January, 2019 went down by 1.82 per cent. Specifically, the market capitalisation for the month declined by N321 billion to close on January 31, 2019 at N11.395 trillion from N11.721 trillion in December 31, 2018.

Also, the All-Share Index (ASI) shed 1.82 per cent to close at 30,557.20 points from 31,430.50 at which it opened trading for the year. Most sectors indices closed in the red, except for NSE Banking Index which gained 1.93 per cent.

NSE Industrial Goods posted the largest loss of 2.02 per cent, followed by the Insurance with a decline of 1.37 per cent, while Oil and Gas depreciated by 1.32 per cent. NSE 30 went down by one per cent, while NSE Consumer Goods shed a monthly loss of 0.41 per cent.

The performance in the month of January revealed a slowdown in selling pressure, ahead of the February 16 Presidential and National Assembly elections, even as investors continue to follow keenly the developments in the political space. Some companies have also informed the NSE of notification of their closed period and with intention of declaring dividend.

Analysts expect that the increasing number of notification for board meeting dates to approve 2018 financial year scorecards will guide dividend income investors on how to start positioning ahead of release date, because it is not all companies that need regulators’ approval before making their numbers available to investors.

They added that these notifications to the NSE and the quarterly results should give insight on which sector or industry you build tents now.

Chief executive officer of the NSE, Mr. Oscar Onyema, recently projected that uncertainty in crude prices and Nigeria’s forthcoming general elections will define investors’ sentiments in the first half of 2019.

Onyema said, “We anticipate volatility in equities markets in first half of 2019, with enhanced stability post-elections. We believe the swift approval and implementation of the 2019 budget will have a positive impact on companies’ earnings as well as consumer spending. Therefore, we expect an uptick in market activity during the second half of 2019.”

Speaking on market performance for January, chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion said that the lingering profit taking and volatility, driven by political tension is expected to persist, as market players continue to reposition for 2019 dividend declaration season that will shape market performance after the elections.

Omordion said “We advise cautious trading and investing why positioning in fundamentally sound equities. Volatility will also persist as investors and fund managers reposition their portfolios, with eyes fixed on political space and ahead of full year company earnings position and post-election market dynamics.’’

He also said that these are likely to drive prices north, or south, while determining market direction before or after the Presidential election, saying that investors should review their positions in line with their investment goals, strength of the company numbers and act as events unfold in the global and domestic environment.

He advised investors to go for equities with intrinsic value, by allowing numbers to guide their decisions while repositioning in any stock, especially now that stock prices remain low in the midst of mixed company numbers, weak economic and market fundamentals.

Analysts at Afrinvest Limited said that “we maintain a bearish outlook for the market in the near term as we expect the run on the market to persist till post-election stability is established. Nonetheless, we are of the opinion that long-term investors can take position in cheap assets with sound fundamentals in order to take advantage of the anticipated post-election rally.”

Also, a chartered stockbroker and chief executive officer, Sofunix Investment and Communications, Mr. Sola Oni attributed the continuous slide to a combination of factors, saying that many investors were apprehensive of the likely breakdown of law and order during the general election in February.

He said the fear was prompted by unguarded comments of the political class, adding that many investors wanted to reduce their losses by selling off now. Oni added that the stock market is a reflection of the economy and indeed a barometer that gauges economic mood.

Meanwhile, Afrinvest in its 2019 Economic and Financial Market Outlook report identified the four major elements that will propel the Nigerian stock market in 2019. They explained that they are anticipating the performance of the stock market to be strengthen in 2019, and they listed four factors that would determine this. They are post-election, new listings, macroeconomic indicators and corporate earnings.

According to Afrinvest, before 2018, foreign investors have been the key players in the Nigerian stock market. Recently, local investors have contributed immensely to the stock market as a result of the pulling out of foreign investors from the local market.

They said, “In 2019, we expect foreign investors to return to the Nigerian stock market after the conclusion of the elections and as such anticipate an improvement in performance.

“Furthermore, given current pricing of the market, which we believe is attractive, even more attractive in dollar terms, we expect foreign investors to take advantage of this whilst domestic investors will react accordingly.”