Previous week, the local stock market had lost 15.6 per cent of its worth since the beginning of 2019. The trend continued last week, as the trend was extended to15.9 per cent for the same period. This definitely is bad news to investors, local and foreign.
If the saying is true, that the stock market is the mirror of the economy, then the newly inaugurated eight-man economic team must rise up to the occasion and deliver the nation’s economy from bleeding to death.
Analysts expect much from the team, because some of them have shown deep knowledge of the economy and positively criticized government in the past. For these analysts, the time for criticism is over, now is time to show worth.
Last week, the Nigerian Stock Exchange All Share Index (ASI) Sheds 30basis points (bps) Wee-on-Week (W-o-W).
The week ended on a negative note after the ASI fell by 3bps on Friday, following losses in GUARANTY (-1.3 per cent), ZENITH (-1.4 per cent) and WAPCO (-1.0 per cent). Overall, the losses recorded on four of five trading days led to a 30bps W-o-W decline in the ASI to 26,448.62 points while Year-to-Date (YTD) loss worsened to 15.9%. Furthermore, investors lost N41.5 billion as market capitalisation fell to N12.9 trillion. However, activity level rose as average volume and value inched higher by 8.6 per cent and 44.2 per cent to 310.6m units and N5.0 billion respectively. GUARANTY (77.2 million units), ACCESS (53.2 million units) and FBNH (46.5 million units) were the most traded stocks by volume while NESTLE (N5.0 billion), GUARANTY (N2.1 billion) and MTNN (N916.6million) led by value.
But last week opened on a positive note after Price appreciation in DANGCEM (+0.6 per cent), DANGFLOUR (+3.6 per cent) and UBA (+1.7 per cent) stoked gains in the equities market by 10bps. However, market shed gains on the three days that followed on the back of sell-pressures in MTNN (-0.8 per cent), WAPCO (-4.1 per cent), UBA (-2.5 per cent) and GUARANTY (-1.3 per cent). Accordingly, the Benchmark index fell 20bps, 16bps and 6bps consecutively on Tuesday, Wednesday and Thursday.
Performance was mixed across sectors under our coverage W-o-W. Gains in CUSTODIAN (+9.7 per cent) and LAWUNION (+6.8 per cent) moved the Insurance index up by 2.4 per cent to lead the gainers while the Consumer Goods index followed, up 0.1% W-o-W following price appreciation in DANGFLOUR (+3.6 per cent) and FLOURMILL (+2.4 per cent). Conversely, the Banking index led the laggards, down 2.0 per cent W-o-W on the back of losses in STERLING (-7.7 per cent) and ETI (-5.4 per cent). Similarly, Industrial Goods and Oil & Gas indices lost 0.3 per cent and 0.2 per cent W-o-W apiece due to sell pressures in CUTIX (-12.7 per cent), WAPCO (-5.3%) and OANDO (-2.0 per cent). On the other hand, the AFR-ICT closed flat.
Investor sentiment strengthened as market breadth (advance/decline ratio) increased to 0.8x from 0.6x as 18 tickers gained against 22 that lost. FIDSON (+11.1 per cent), CUSTODIAN (+9.7 per cent) and LAWUNION (+6.8 per cent) led the best performing stocks while CORNERSTONE (-17.9 per cent), CUTIX (-12.7 per cent) and PZ (-11.9 per cent) led losers. It is expected that the bearish momentum would continue although there is room for gains due to opportunities for bargain hunting in fundamentally sound stocks.
Earlier last week, the International Monetary Fund (IMF) downgraded global growth forecast for 2019 to 3.0 per cent; the fifth downward review from its initial 3.9 per cent forecast mid-2018. This means that global growth is expected to be at its slowest since the 2008 financial crisis. The downward revision is hinged on weakening economic activities, partly caused by prolonged trade tensions. Meanwhile, the trade tension between US and China seems to be abating as the two parties reached a tentative agreement this week. The US suspended the tariff hike on $250.0 billion worth of Chinese goods which was supposed to take effect on Tuesday while China equally agreed to purchase US agricultural products worth $40.0 billion – $50.0 billion. In Europe, a provisional Brexit deal was reached between the United Kingdom (UK) and the EU. Although this is encouraging, the approval of the UK parliament is essential to finalising the deal. This may be a hard nut to crack as in the case of the previous deal reached by ex-Prime Minister, Theresa May, which was rejected by the parliament. It is expected that Brexit developments and persistent trade tensions would shape performance in the developed markets in the coming weeks.
Performance in the developed markets was bullish this week as five of seven indices under our coverage gained. In the US, the S&P 500 and NASDAQ indices rose 1.2 per cent and 1.0 per cent W-o-W respectively due to the trade agreement with China and positive earnings releases.
In Europe, performance was mixed as only Germany’s XETRA DAX index gained, up 1.2 per cent W-o-W while UK’s FTSE All Share and France’s CAC 40 indices lost 0.5 per cent and 0.4 per cent W-o-W respectively. Japan’s Nikkei 225 rose 3.2 per cent W-o-W while Hong Kong’s Hang Seng index appreciated 1.6 per cent W-o-W despite persistent political protests.
In the BRICS markets, performance was bullish as only 1 of the indices we track declined W-o-W. China’s Shanghai Composite index was the lone loser, down 1.2 per cent due to weak economic growth which was the lowest since early 1990s. On the flip side, India’s BSE Sens led gainers, up 3.1 per cent. Russia’s RTS index trailed with a gain of 2.0 per cent W-o-W. Brazil’s Ibovespa and South Africa’s FTSE/JSE All Share indices also gained 1.3 per cent and 0.9 per cent W-o-W respectively.
The African market recorded mixed performance as three of six indices under our coverage lost W-o-W. Mauritius’ SEMDEX Index lost the most, shedding 1.0 per cent W-o-W. Meanwhile, Egypt’s EGX 30 and Nigeria’s All Share indices trailed, down 0.7 per cent and 0.3 per cent W-o-W respectively. Conversely, Ghana’s GSE Composite index led gainers, advancing 1.1 per cent. Morocco’s Casablanca MASI and Kenya’s NSE 20 indices also gained 80bps and 20bps W-o-W respectively.
In the Asia and Middle East region, performance was mixed but negatively skewed as 3 of 5 indices tracked declined W-o-W. Saudi-Arabia’s Tadawul advanced the most, gaining 0.8 per cent W-o-W and Turkey’s BIST 100 index followed with a 0.6 per cent gain W-o-W. On the other hand, Qatar’s DSM 20 led laggards, down 1.9 per cent W-o-W. Similarly, UAE’s ADX general and Thailand’s SET indices declined, shedding 0.4 per cent and 0.3 per cent W-o-W respectively.