Weekly Equities Market Review and Outlook –Week Ended Jan. 29, 2016

The Nigerian equities market experienced a mixed performance this week although sentiments were mostly positive given the pre-MPC meeting bargain hunting coupled with the rebound in global oil prices. The All Share Index (ASI) closed positive on 3 trading days save for Tuesday (-0.6%) & Wednesday (-2.1%), bringing W-o-W gain to 0.4% as the index closed at 23,916.15pts, while YTD loss settled at -16.5%. The outcome of the MPC meeting on Tuesday -- where committee members voted to hold all rates constant - significantly impacted Wednesday's market performance as the All Share Index (ASI) dipped 2.1%. The rally in oil prices however buoyed market sentiment as the index closed in the green on the last trading days of the week. Activity level however weakened in the week as average volume and value traded declined 48.0% and 12.0% to 226.5m units and N1.9bn respectively.

Performance across sectors was mixed as the Banking index led sector gainers, appreciating 5.1% W-o-W consequent on bargain hunting in ZENITH (+11.6%) and GUARANTY (+9.3%). Similarly, the Oil & Gas Index improved 1.4% W-o-W due to price appreciation in SEPLAT (+24.0%). On the flipside, the Insurance and Industrial Goods indices depreciated the most, losing 1.6% and 1.5% W-o-W due to losses in MANSARD (-5.9%) and DANGCEM (-0.8%). The Consumer Goods index fell -0.4% W-o-W.

Market sentiment also improved this week as market breadth -advancers/decliners ratio- settled at 1.2x  (against previous level of 1.0x) as 33 stocks advanced while 29 stocks declined. The Best performing stocks this week were CADBURY (+36.8%), SEPLAT(+24.0%) and TRANSXPRESS (+13.6%) while CAVERTON (-17.0%), UNILEVER (-14.2%) and FBNH (-12.7%) declined the most. In light of the weakening investor confidence dictating short holding period of investors, we expect to see some profit taking in the coming week though inflow of corporate earnings may swing market bearing. Our overall short term outlook remains bearish on macroeconomic concerns and forex inflexibility; hence, we reiterate our long term investment case on Nigerian equities.

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