Equities Market Review and Outlook –Week Ended 11th September, 2015

The Nigerian Bourse showed some signs of recovery today after 2 consecutive days of losses as the Benchmark Index -- All Share Index- gained 97 bps to close trading for the week at 29, 689.08points. The improvement in performance today was driven GUINNESS (+10.2%), NIGERIAN BREWERIES (+3.0%) and DANGCEM (+1.8%) as investors gained a total of N94.8bn to bring Market capitalization N10.2tn. Activity level today however weakened as total volume and value traded declined 34.3% and 23.5% , to settle at 201.2m units and N2.4bn respectively.

Performance across sectors was broadly positive as all indices, save for the Oil &Gas Index which depreciated 2.5% on the back of losses in FORTE (-5.0%) and TOTAL (-4.6%), closed in the green. The consumer goods index gained the most today (+2.1%) consequent on price appreciation in GUINNESS (+10.2%) and NIGERIAN BREWERIES (+3.0%). The Banking and Industrial goods indices improved 1.2% and 0.6% respectively, while the Insurance index closed flat.

Sentiments towards the Nigerian Bourse improved today as market breadth (advancers/ decliners' ratio) settled at 1.3x as a result of 23 stocks that advanced against 18 declining stocks. The Best performing stocks today were GUINNESS (+10.2%), UBA (+8.5%) and TRANSCORP (+5.0%) while the biggest laggards were VONO (-8.2%), FORTE (-5.0%) and STANBIC (-5.0%). The improvement in performance shows that the frantic sell offs that were observed in the market following the JP Morgan announcement has been stemmed however, we (Analysts at Afrinvest) maintain our stance on cautious trading as investors await some form of policy direction form the polity.

Weekly Equities Market Review
The Nigerian equities market opened the week stronger, closing 1.8% and 1.0% higher on Monday and Tuesday respectively. However, on Wednesday investors took to panic selling as the news flow about JP Morgan's planned removal of Nigeria from its GBI-EM index filtered into the market. Thus, the benchmark index slumped 2.8% on Wednesday, further eased by 0.2% on Thursday but appreciated 0.9% W-o-W to close at 29, 689.08pts. Consequently, YTD loss improved to 14.3% and market capitalization booked a sum of N107.9bn W-o-W gain to berth at N10.2tn. Expectedly, activity level waned W-o-W as average volume traded fell 42.3% W-o-W to 281.2m units while average value traded declined 35.9% to N2.7bn W-o-W.

The Oil & Gas Index was the lone decliner (-4.2%) W-o-W consequent on losses in CONOIL (-14.2%) and FORTE (-5.4%) during the week. The Consumer goods index led advancers as the index appreciated 2.4% W-o-W on the back of gains in GUINNESS (+9.8%) and PZ (+8.0%). In the same vein the Industrial goods, Insurance and Banking sector Indices appreciated 0.9%, 0.7% and 0.6% W-o-W.

Investors sentiment weakened as market breadth (advancers/decliners ratio) tumbled from 2.9x in the previous week to 1.3x at the close of the week. This was premised on the panic selling witnessed at the middle of the week on the back of jitters on JP Morgan proposed ejection of Nigeria from its index. The best performing counters for the week were TRANSEXPR (+25.7%), IKEJAHOTEL (+15.9%) and OKOMUOIL (+14.2%) while the worst performances were recorded in CAVERTON (-17.9%), CADBURY (-15.3%) and VONO (-15.1%). We expect cautious trading to pervade the market for most of the coming week as the US FED's highly anticipated September FOMC meeting is scheduled for 16th and 17th of September amid unrelenting instability in crude oil market as Saudi rejects calls to defend market price.

Global Market Review
The euphoria that has accompanied the announcement by the US Fed of a possible hike in rates in the month of September for the first time in close to a decade, seems to be waning as global conditions appear not to be in consonance with a likely rate hike. Given the developments across regions, a rate hike at the moment will seem rather inconsiderate given the probability of a slowdown in global growth coupled with lower commodity prices. In addition, the preferred requirements by the US Fed for a rate hike are still yet to be achieved.

Notwithstanding the above, there was a noticeable improvement in performance of the equities markets under our coverage this week relative to last week where all markets, save for some African bourses, trended mostly southwards. In the developed markets, the NASDAQ and the S&P 500 appreciated 1.8% and 1.2% W-o-W respectively, despite the volatilities that have pervaded the markets due to concerns on the timing of the Feds Rate hike. Similarly, the UK FTSE advanced 1.2% W-o-W.  In the same vein, the European markets recorded an improved performance as the German DAX and the France CAC gained 1.3% and 1.0% W-o-W respectively as investor sentiments improved due to the return of some relative calm.

All the Asian markets, also trended Northwards W-o-W as the Hong Kong Hang Seng (+3.2%), Japan Nikkei (+2.7%) Chinese Shanghai Composite (+1.3%) gained W-o-W. The Improvement in performance is majorly driven by Investors' optimism that the government will extend intervention in the market even as investors await Chinese Industrial output data, retail sales and investment data that will give some form of direction on whether the economy is continuing to lose momentum.

In the other markets under the BRICS classification, the Russian RTS, South African FTSE and Brazilian IBOVESPA were down 0.8%, 0.3% and 0.4% W-o-W respectively as the persistent decline in the price of oil has dampened sentiments towards the market. On the flipside, the Indian BSE Sens , appreciated 1.6% W-o-W. Across the African markets, there was a mixed performance as the EGYPT EGX and Ghana GSE closed in the red, losing 3.5% and 0.5% W-o-W respectively while the Kenyan NSE and the Nigerian All Share Index advanced 1.8% and 0.6% W-o-W respectively.