An­a­lysts pre­dict De­cem­ber rally in eq­ui­ties as value drops 4.8% in Novem­ber

Business a.m. - - FINANCE & INVESTMENT - Sto­ries: Ades­ola Afo­labi

IN SPITE OF A 4.8 PER­CENT de­cline in the over­all value of the eq­ui­ties mar­ket recorded in the month of Novem­ber, in­vest­ment an­a­lyst have ex­pressed op­ti­mism on the month ahead, say­ing the Nige­rian eq­uity mar­ket could get a Christ­mas rally in De­cem­ber.

Ac­cord­ing to an in­vest­ment re­port by United Cap­i­tal ti­tled ‘is a Santa Claus rally im­mi­nent’ the an­a­lysts noted that his­tory shows “the All Share In­dex has av­er­aged a re­turn of 2.8 per­cent in the fi­nal month of the year since 1998 sec­ond only to May which has av­er­aged 5.3 per­cent.”

“Also, in the past 21 years, the mar­ket has only seen four neg­a­tive monthly re­turns in De­cem­ber (specif­i­cally in 2001, 2005, 2008, 2009) - the low­est of any other month. Thus, the prob­a­bil­ity that there would be a De­cem­ber rally is a whopping 81.0 per­cent,” their re­port stated.

They noted that De­cem­ber is a month where play­ers be­gin to trade their op­ti­mism about the new year. “It is also a month where port­fo­lio man­agers look­ing to re- balance their port­fo­lios take po­si­tion ahead of year-end re­port­ing.

Added to this, the mar­ket clearly looks at­trac­tively val­ued in light of the sell-off we have seen this year. This clearly of­fers an in­ter­est­ing en­try-point ahead of the up­com­ing pres­i­den­tial elec­tions and even to a mul­ti­year re­cov­ery story,” they said.

Mean­while, a 19.3 per­cent year-to-date loss of the Nige­ria eq­ui­ties mar­ket ranks it the fifth worst per­form­ing mar­ket in the world, be­hind the Nairobi Stock Ex­change in Kenya which topped the list with -25.09 per­cent yearto-date re­turns as at end of Novem­ber, ac­cord­ing to a re­port by an­a­lysts at In­vest data Lim­ited.

The re­port noted that the Athens Stock Ex­change in Greece fol­lowed Nairobi, shed­ding 24.83 per­cent yearto-date loss, ahead of China and Dubai fi­nan­cial mar­kets in the United Arab Emi­rates (UAE) with -21.33 per­cent and -20.32 per­cent neg­a­tive year-to-date re­turns re­spec­tively.

“In all, look­ing at stock mar­ket re­turns (in lo­cal cur­rency) across 75 coun­tries around the world, 2018 has turned into a red year for most eq­ui­ties as the av­er­age coun­try loss is now 3.75 per­cent neg­a­tive year-to-date” In­vest Data an­a­lysts noted.

A re­view of the mar­ket ac­tiv­i­ties for the week ended 30 Novem­ber, 2018 in­di­cates the All Share In­dex posted losses on 4 of the 5 trad­ing ses­sions in the week, fall­ing 2.5 per­cent week-on-week to set­tle at 30,874.17 points. Like­wise, while mar­ket cap­i­tal­i­sa­tion shed N240.6 bil­lion last week to close at N11.3 tril­lion.

Sim­i­larly, trad­ing ac­tiv­ity weak­ened as av­er­age vol­ume and value traded de­creased by 25.2 per­cent and 50.6 per­cent week-on-week to 239.7 mil­lion units and N2.9 bil­lion re­spec­tively.

The top traded stocks by vol­ume were Ac­cess Bank (159.8m units), Univer­sal In­sur­ance (150.1m units) and Di­a­mond Bank (70.0m units) while Stan­bic (N2.2bn) , Nige­rian Brew­eries (N1.2bn) and Nes­tle (N1.2bn) topped trades by value.

The week started off on a neg­a­tive note as the ASI dipped 0.3 per­cent due to sell offs in mar­ket bell­wethers;Dan­gote Ce­ment, Nige­rian Brew­eries and Guar­anty Trust Bank.

The neg­a­tive per­for­mance was sus­tained for 3 con­sec­u­tive ses­sions, de­clin­ing 1.3 per­cent, 0.5 per­cent and 1.3 per­cent on Tues­day, Wed­nes­day and Thurs­day re­spec­tively but up­turned on Fri­day with the ASI ris­ing 0.9 per­cent, largely due to gains in Dan­gote Ce­ment and Nige­rian Brew­eries. They ad­vanced by 1 and 4 per­cent re­spec­tively.

In the week un­der re­view per­for­mance across the sec­tors closed bear­ish with 2 of 5 ma­jor in­dices that ad­vanced while 3 de­clined. The in­sur­ance in­dex gained the most, up 4.7 per­cent last week due to sus­tained buy in­ter­est in Con­ti­nen­tal Re-in­sur­ance (+6.4%). The con­sumer goods in­dex rose 0.1 per­cent due to bar­gain hunt­ing in Nes­tle (+1.4%) and In­ter­na­tional Brew­eries (+1.8%).

On the flip side, the oil & gas in­dex shed the most, down 5.1 per­cent last week due to sell pres­sures in Se­plat (-9.7%) and Oando (-2.1%). Sim­i­larly, the in­dus­trial goods and bank­ing in­dices de­clined, down 3.4 per­cent and 3.0 per­cent week-on-week re­spec­tively due to price de­pre­ci­a­tion in Dan­gote Ce­ment (-4.2%), Guar­anty Trust Bank (-5.6%) and Zenith (-3.3%).

In­vestor sen­ti­ment was weak last week, as mar­ket breadth (ad­vance/de­cline ra­tio) de­creased to 0.6x, from 1.2x in the pre­vi­ous week, fol­low­ing 23 stocks that ad­vanced against 39 that de­clined.

The best per­form­ing stocks for the week were Con­ti­nen­tal Re-in­sur­ance (+33.3%), Beta Glass (+10.0%) and Cu­tix Plc (+9.6%) while Di­a­mond Bank (-31.6%), Unity (-18.8%) and ABC Trans­port (-12.9%) were the worst per­form­ing stocks.

Fol­low­ing four days of losses in the week, Afrin­vest an­a­lysts re­it­er­ate a ses­sion of bar­gain hunt­ing in early trades this week.

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