₦airaland Forum

MARKET MAINTAIN STRONG TREND- NEXT RESISTANCE LEVEL FOR NSE ALL SHARE INDEX

Withing 2 weeks, May and Baker Returned 100%. The bulls are strong. This is a good time to review our portfolio and move to equities that will move with the market.

Looking at the performance this week. Fidson is closely behaving like May and Baker. Although when May an Bakers gains 10% in a day, Fidson gains 5%;. The strong trend in these 2 equities is still on and next supply point still a little bit far. if May an Baker does not make it to NGN5.00 it may be a good time to take some profit on the stock.

For the closest supply point on the NSE All Share index, the level to watch are between, 33,986.05 and 34,813.53.

I am enjoying this market, my technical analysis is telling me the risks to avoid. Those red card prices I have posted previously are my exit guides and I see them working fine.

Caution: Investing is a risky venture. This is just my opinion and I cannot be liable for any loss suffered as a result of following this recommendation All data used are assumed to be correct, but you may need to verify some of the figures independently.

YELLOW CARD POINTS FOR ETERNA OIL/AFRIPRUD

With the NSE All Share index close to a major supply point. I look forward to taking profits/getting out with minimal losses, especially in those equities that are disappointing me. FBNH escaped the red card today, but still under close watch.

Today the 2 equities I am looking at are Afriprud and Eternal Oil. From my preferred EMAs/support points if the equities goes below these prices, I will sell my holdings without looking back. I have consider these points by also looking at my purchase prices, to ensure that I do not make a loss in view of the recent uptrend.

Learning technical analysis has been highly beneficial to me. It has reduced the era of big losses and not knowing what to do in consolidating markets.


Caution: Investing is a risky venture. This is just my opinion and I cannot be liable for any loss suffered as a result of following this recommendation All data used are assumed to be correct, but you may need to verify some of the figures independently.

the chart is from: https://markets.ft.com/data/equities/tearsheet/charts?s=FBNH:LAG

Looking at today's closing figure for First bank. If the price deccrease continues for the next 2 days. I am out!!! This is on the condition that price close below (body of candle not torching the chart again, I exit the following day) the 9 period EMA.

Caution: This is my personal opinion.

PRICE FALLING ON 12 JUNE SEEMS NORMAL FOR THESE 2 EQUITIES- I WILL ONLY THINK OF SELLING IF PRICE CLOSES BELOW THE MOVING AVERAGES

FBN and Afriprud I will not sell until the price goes below the indicated moving averages.

Caution: Investing is a risky venture. This is just my opinion and I cannot be liable for any loss suffered as a result of following this recommendation All data used are assumed to be correct, but you may need to verify some of the figures independently.

AFRINVEST REPORT- LIKELY PREDICTION OF MORE BULLISH TREND

I don't like stories much (I believe in charts), but the story below sounds interesting. The summary of the story is, expect a bullish trend in the market. I will not be surprised to see the resurgence of Margin loans, that will further ad fire to this market. Enjoy the "turechi " below while we eagerly wait for next week to start. I will not be surprised if one of the top gainers for next week make 50%.
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“Great Macro Trade of 2017”: Changing Narratives on Nigerian Equities as Macroeconomic Risks Dissipate

How quick narratives change in frontier markets investing. Just three months back, as the Naira weakened below N500.00/US$1.00 in the parallel market and business confidence waned due to foreign currency shortages, macroeconomic risk became the most fundamental short term basis for forecasting Nigerian equities despite cheap valuation of assets. Fast forward to June, all that seem to be in the very distant past with reinvigorated investment confidence, popularly termed “animal spirit” by JM Keynes, driving asset prices and valuation multiples to their 1-year highs in what we have termed “Great Macro Trade of 2017”.

Whilst we had called positive market sentiment post-FX liberalization in our 2017 Economic and Financial Market Outlook, the bounce is also not so surprising for investors accustomed to the boom-bust cycle of frontier markets. Predominantly, equities have essentially been a macro play in Nigeria over the past two years due to elevated macroeconomic risks which overshadowed resilient earnings fundamentals of companies in sectors ranging from banking to non-cyclical manufacturing. Since the turn of the second Quarter however, macroeconomic fundamentals have shown remarkable improvements due to:

Rebound in oil production volumes and stable oil prices - which have stabilized fiscal balance and buoyed FX earnings;
Recent policy moves by the central bank to converge FX rates at all segments of the market. The latest of these moves is the opening of the Investors’ and Exporters’ Window (I&E window) in April which allowed market determined pricing of FX on a “willing buyer willing seller” basis for trades related to invisibles. Transactions have topped US$1.7bn in in the I&E window since turnover data became available three weeks ago.

The I&E window has opened up the equities market once again to foreign investments with average value of daily trades on the NSE more than doubling to N4.5bn since 24th April from N1.6bn in the prior month while the benchmark All Share Index has gained 26.4% in five weeks. MSCI last week also increased Nigeria’s weighting in its Frontier markets index from 6.5% to 7.9% while the CBN added to the flurry of good news with a circular released on 5th April 2017 to improve efficiency of the I&E window and aid faster convergence of all rates. Hence, as the stars continue to align for Nigeria from different directions, the narratives have conveniently changed from an underperforming economy in crisis to a growth economy leaving behind her cyclical and structural economic problems. These changing narratives have so far justified the recent bullish run on equities.

Yet, current trailing market P/E multiple of 14.2x may also appear fair, if not lofty, compared to 12.7x the market was trading three months back, bringing to fore the question on whether to pull the brakes on overweighting equities or doubling down on the accelerator. We answer this question and more in subsequent sections of this note, giving our perspectives on the fundamental and technical factors to consider as well as the risks to price into valuation.

Foreign Portfolio Investments…. A Change in Tide?
Since the crash in global oil prices which began in H2:2014, there have been an exodus of foreign investors from the equity market and reduction in foreign investments inflows partly due to mispricing of the domestic currency and weak liquidity in the FX market. Historically, foreign players have accounted for a larger proportion of trades in the domestic equities market, hence the investment decision of these players has been a factor driving market performance.

As depicted in chart 1, 2012- 2013 was a golden age for investors in the Nigerian Bourse, essentially due to influx of foreign funds benefiting from access to easy money in advanced economies and seeking high returns in growth markets with cheap valuations. Consequently, foreign investment in equities peaked at US$4.9bn in 2013 but the trend reversed in the last three years following the decline in commodity prices. Average FPI into equities crashed 59.1% from US$3.8bn in Q3:2014 to US$1.5bn in Q4:2014 and has remained on a steady decline, settling at US$102.0mn in Q1:2017. The slowdown in FPIs is reflected in the performance of the equities market which has declined for three consecutive years.

Interestingly, the introduction of somewhat flexibility in the I&E FX window in April has attracted frontier fund managers into Nigerian equities with noticeable impact on market performance. We believe there is still room for more participation, especially from emerging market funds, as liquidity within the FX market continues to improve.

The MSCI Story…Golden Sectors and Stocks to Watch
The Morgan Stanley Capital International (MSCI) Frontier market index was rebalanced in May 2017 with Nigerian stocks weighting increased to 7.9% from 6.5% following the upgrade of Pakistan from the Frontier Market Index to the Emerging Markets Index. The increase of Nigeria’s weighting further supported the 4-week old rally in the Nigerian Bourse as the benchmark index gained 3.9% on resumption of trading this week. Before the announcement of the Index rebalancing, MSCI had put Nigeria’s status in the Frontier Markets Index under consideration for a “Standalone” re-classification as a result of the liquidity constraints and fragmentation of the foreign exchange market.

Nonetheless, we think the odds of Nigeria being reclassified are slimmer now on the back of the recent development in the FX market, particularly the introduction of the I&E window and improvement in FX interventions by the apex bank, which has buoyed liquidity and narrowed the parallel market premium. We perceive that MSCI will most likely adjust the currency it uses for the computation from Interbank pegged rate to the I&E fixing (NAFEX).

Regardless, we believe the increase in Nigeria’s weighting bodes well for the equity market, particularly the 16 stocks included in the index, as it exposes the market to global tracking funds seeking exposures to frontier markets. Whilst the market prices of these stocks may appear overvalued based on absolute valuation, their relative valuation multiples (as shown in chart 3) indicate that they are still attractive when compared to other Sub-Saharan African and frontier markets.

Our analysis reveals that the Banking, Industrial and Oil & Gas sectors are under-priced when compared to the other Sub-Saharan African Frontier Markets which avail investors the opportunity to take position in the sectors. However, the Consumer Goods sector is relatively expensive owing to the historical premium investors value Nigerian consumer goods companies as well as the recent pressure on earnings of most of the blue-chip stocks in the sector.

What About Fundamentals…Are Nigerian Equities Still Undervalued?
Prior to recent rally on the Bourse, most stocks quoted on the Nigerian stock exchange were trading at deep discount to analysts’ valuation as the major players (PFAs, Mutual Funds, and Insurance Firms etc.) held short-term views. The re-entry of foreign players coupled with the ongoing positive sentiment in the economy presents a possibility for a year-long bull market. The NSE All Share Index price-to-earnings ratio stands at 14.2x, which is relatively cheaper compared to frontier and emerging markets peers - South Africa FTSE/JSE (18.9x), MSCI FM index (15.0x) and BRICS (16.5x).

Moreover, company scorecards have remained resilient in recent times as companies exposed to the downside risk of macro headwinds were able to navigate the choppy terrain by leveraging on scale, non-core earnings growth strategy, operating cost optimization, local input sourcing, usage of deferred tax assets as well as individual proficiencies to stay profitable. We remain optimistic on corporate earnings for 2017, forecasting EPS to grow 18.5% for companies within our coverage as we expect the recent improvement in FX liquidity - which has resulted in the appreciation of parallel market FX rate – to positively impact cost of sales for manufacturers, while improvement in fiscal revenue for the Sovereign and Sub-nationals is also positive for consumer spending and earnings growth. Nonetheless our general bullish view of the market, our assessment of different sectors differs as we highlight below:

Banking Sector: The Banking sector has benefitted the most from the bullish run, with the NSE Banking index YTD return (at +42.4%) outperforming the benchmark. Valuation multiples have also improved – sector P/E and P/BV ratio have risen to 6.3x and 0.8x from 4.3x and 0.6x in January respectively. However, investors’ interest has largely been centered on Tier-1 lenders with P/E and P/BV for these banks at 7.1x and 0.8x respectively compared to average P/E and P/BV for Tier-2 lenders (ex-STANBIC) of 5.7x and 0.2x respectively.

Nonetheless, we note that most of the Tier-2 banks (DIAMOND, SKYE, FCMB, UBN and UNITY) are still recording below-trend level of fundamental returns (measured by ROE) whilst facing capital adequacy challenges. Hence, it will take more time for value to be unlocked in the stocks. This informs our preference for Tier-1 banks still trading below pre-crisis valuation multiples and recommend Tier-2 banks for investors with longer holding period.

Industrial Goods Sector: The Industrial Goods sector has returned +25.1% YTD with sector P/E now at 12.9x. Cement companies – which dominate the sector index weighting – have largely driven the rally as challenges which had weighed on their earnings in FY:2016 (gas pipeline vandalism, aggressive price competition and high external leverage) have been largely surmounted with earnings now set to improve remarkably in FY:2017. The improvement in industry fundamental was reflected in Q1:2017 results of CCNN, WAPCO and DANGCEM but the short-term upsides to these stocks are limited following the recent rally.

Insurance Sector: Despite weaknesses in Nigeria’s macroeconomic fundamentals in 2016, performance of the insurance sector was largely positive, albeit modest. The Insurance index has however underperformed the benchmark with current Year to Date return of 14.0% largely driven by gains in MANSARD. One of the factors dragging sentiment towards the sector is the renewed drive towards risk based supervision and capitalization rules via the shift to Solvency II and ORSA (Own Risk and Solvency Assessment) guidelines. Solvency II is a Risk Based Supervision (RBS) – similar to the BASEL II guidelines for Banks - which is expected to increase pressure on capital as it specifies how the capital requirement and resources are set, assessed and determined. Consequently, many insurers are in the process of raising additional capital with potential dilution of shareholders’ equity. Hence, we are neutral on the sector.

Consumer Goods Sector: Activities in the Consumer goods sector have been majorly hampered by the economic downturn which dragged revenue while lingering FX liquidity challenges pressured profitability. These factors weighed on sentiment towards stocks in this sector. However, the recent improvements in the general economic condition as well as increased FX supply is expected to boost performance of companies in the sector this year with market prices already reflecting this expectation. NESTLE and NIGERIAN BREWERIES have advanced 19.1% and 7.5% YTD. Likewise trading multiples - NESTLE (P/E: 79.9x) and NIGERIAN BREWRIES (P/E: 41.7x) - indicate that investors continue to place premiums on pricing of these stocks. Our top picks in the sector are NESTLE and NIGERIAN BREWERIES, based on the fact that foreign players have started to return to the market and “pre-FX crisis trading trend” suggests that these counters are investors’ choice picks in the sector.

Oil & Gas Sector: The sector has come under a lot of pressure having been hit hard by militancy and liquidity challenges in the power sector which has constrained the performance of sector large-caps such as OANDO, SEPLAT and FORTE. Downstream companies which outperformed in 2016 have not enjoyed similar sentiment save for MOBIL which is a subject of an M&A transaction. Consequently, the sector is the weakest performer of all sector indices we track with a YTD return of 1.8%. However, we believe the sector should record improvements in subsequent quarters in terms of earnings and valuation, due to restoration of peace in the Niger Delta, reopening of the Forcados terminal which is the major export routes for upstream indigenous companies and efforts being channeled into solving the liquidity crisis in the power sector.

Greatest Risk to Current Optimism – FX Liquidity and Market Structure
The CBN’s approach towards the management of FX remains a downside risk to equity market performance as past and current developments indicate that sentiment towards equities have been anchored by FX liquidity. This is not surprising as investors are typically wary of participating in the equities market when the economy faces FX liquidity challenges or inconsistent management policies that do not provide an assurance for convenient repatriation of funds. The recent rally in domestic asset prices since the launch of the I&E FX window attests to the importance of a market determined FX rate and exchange regime. Thus, the CBN’s ability to maintain its stance of non-interference in the I&E window regardless of the direction in which the naira trends, is highly essential, as a breach on the CBN’s part will almost certainly retard participation by investors in the equities market.

However, the ability of the CBN to sustain its timely interventions which have significantly boosted FX liquidity in the economy remains susceptible to shocks in the global Oil market. The possibility of lower global oil prices and reduced production levels – that could come about through an OPEC quota limit extension to Nigeria or acts of sabotage - remain key points of concern as they could stymie oil export earnings which account for a major share of total foreign exchange earnings and consequently pressure the external reserves. Oil prices seem to have stabilized around the US$50.0/b mark post-extension of oil production cuts whilst production level is set to go back to peak level following lifting of Force Majeure on the Forcados Terminal. Going forward, we expect factor drivers of FX liquidity – domestic crude oil production, oil prices and CBN policies on FX – to affect sentiment in the equity market.

“Random Walk on Customs Street” …Will Technical Analysis Work?
Although the Nigerian equities market has been largely shaped by macroeconomic and company fundamentals post-2009 financial market crisis, technical study of trends, momentum, volume and volatility have also dictated the direction of stocks especially when market is considered overbought or oversold. Whilst technical analysis suggests that investors begin to book profit as the Relative Strength Index (14D-RSI) hits the overbought threshold (70 points) and rebounds as RSI hits the oversold region (30 points), our study of trend shows that technical analysis between 2014 and 2016 - period of capital control and FX management inflexibility - has lagged the performance of NSE ASI given the more fundamental leading indicators that drove equities. We hold a strong view that technical indicators are beginning to lead the direction of the index since the launch of I&E FX window but trend is not evocative of support and resistant levels for the RSI yet as we have seen the market sustain a bullish run for days within the overbought territory.

We believe that the Nigerian Bourse is currently being driven by Fundamentals (improving macroeconomic condition, particularly regarding FX) and technical analysis may not be the best methodology in calling the future performance of the Nigerian Bourse in the near term, largely because the market is in transition as stocks begin to break previous resistance levels and try to attain new support and resistance levels.

Conclusion
Nigerian equities as a basket is currently the 2017 goldmine of the emerging and frontier markets following the improved flexibility in the administration of FX. The on-going repricing of the market suggests investors are playing “catch-up” with resilient company fundamentals, which market has lagged, having reduced the premium on macro risk. Whilst we noted in our 2017 Outlook that the equities market will rebound northward of 15.6% if the FX challenges are addressed, the current structure of FX administration and the response rate of the equities market reinforces our conviction that the market is set for a “year round bull run”.



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EXPECT A BLOWOUT NEXT WEEK AS NEW PEOPLE STARTS COMING TO THE MARKET

The highest gainers an losers for the week is shown below. This is MMM via the stock market.

For those of us who are in the market already, it will be good news.

At this stage making a killing in the market will look easy. Now we have to prepare to o some profitable jijo trade. If I am to chose a stock at this time. I will be targeting stocks that are about to release their earnings. Therefore, I will vote for Conoil. I am choosing this based on the fact that the company's March 2017 earnings will not be less than that 0f 2016.

Since the trend starts the strong uptSince the trend starts the strong uptrend, the aily chatrs seems to be lossing relevance, thus the higher time frame now provides a better picture.

From the monthly chart below, the uptrend should still continue as new funds are likely to come into the market. However, about month end there is high possibilty of profit takings which are likely to caouse a pull back into early July.

For now we can all enjoy the uptrend if possible put in additional funds in good equities.

Nigeria stock exchange weekly report for 2 June 2017.
[url]
http://www.mondovisione.com/_assets/files/NSE_Weekly-Report--20170602.pdf[/url]

Thanks for your comment. My opinion is based on technical analysis. Although we are not the market. But did you see how the price of NAHCO pop up today?

That is the power of supply and demand, some institutions are eyeing this stock at this level. But note that the level may shift in the future.

As usual- Caution: Investing is a risky venture. This is just my opinion and I cannot be liable for any loss suffered as a result of following this recommendation All data used are assumed to be correct, but you may need to verify some of the figures independently.

This market is boiling. Until we start seeing the pullback, it is a good time to be in the market. The probability of the market sustaining the uptrend next week seems high. The newspapers are likely to make the trending stock market their major news next week. Therefore, more people are likely to enter the market.

Just like I said in my previous post, I saw good opportunity to buy NAHCO again after the close of market today. The entry is totally technical analysis. I entered close to a demand point. I am placing my stop just 10% below my entry price (total purchase cost). My immediate exit will be at about NGN3.50.

Caution: Investing is a risky venture. This is just my opinion and I cannot be liable for any loss suffered as a result of following this recommendation All data used are assumed to be correct, but you may need to verify some of the figures independently.

I am happy to be a part of this forum. Have been benefiting substantially from this forum, I remember the person that mentioned Fidson when it was below 1.20, I bought during the rising momentum sold during the market pull back thereafter with some 15% profit within 2 weeks.

let us continue the good work. Concerning the whether the market will pull back or not, this should not be a source of too much worry. Let us have our stop loss in place, take our profits and then wait for the right time to come into the market/the appropriate stock again. For example I am seriously looking at NAHCO, it is close to a good demand point that if the market continue going down, a stock like this becomes more attractive, I will let the forum know when I take my position (I hope the company settles their internal squabbles) .

Pullback to sustain the current trend should be contained within the 28,949.99 and 28,598.65 as shown in the chart below. The zone is also supported by 0.382 Fibonacci retracement.

Caution: Investing is a risky venture. This is just my opinion and I cannot be liable for any loss suffered as a result of following this recommendation All data used are assumed to be correct, but you may need to verify some of the figures independently.

SUPPLY AND DEMAND LEVEL - UPDC, LIVESTOCK FEEDS AS AT 25 MAY 2017
I am really fascinated by this supply and demand trading strategy. It simplifies all my technical analysis and make my chart review simpler. Looking at the supply an demand chart for \Livestock Feeds and UPDC, the charts are shown below.

UPDC is currently close to a strong supply level, there is the probability for retracement. It it retraces below 1.94, the next immediate demand level is around 1.66.

Livestock Fees is currently close to a demand level of 0.71. The next supply level for this stock is 0.96 to 1.10.


Caution: Investing is a risky venture. This is just my opinion and I cannot be liable for any loss suffered as a result of following this recommendation All data used are assumed to be correct, but you may need to verify some of the figures independently.

My advise is that we should not allow our profits to turn to a loss. For example on FBN, I was able to get in at NGN3.61 (purchase price including commission and other charges, I pay fairly high commission with my Stockbroker, but this is like 1.73% on the average, this doesn’t worry me as they do a good job by getting me the best prices both in and out), if anything happens and the prices retraces to below 4.70, I will exit halve of my holding with about NGN1.00 per share. I will not allow a profit to turn to a loss.

If there is a retracement, I will buy more shares/look for new purchases as long as there is no breakdown in the supply point/support. A breakdown of the support means, it is time to slow down on new investments.

The above sound interesting and logical. The days of the big losses will be over with this supply and demand point strategy. I will be posting more of this, but may not necessarily be explaining what is supply and demand all the time.

Caution: This is my personal opinion. Use at your own risk. If you need supply/demand point on any stock, you can contact me. I am enjoying this market good time.

Top gainers and winners for the week ended 26 May 2017.

I see Vitafoam moving to about NGN3.13, this is supported by the fundamentals and the technical chart. The momentum f9or the upward movement is strong. Trading this stock at this level involves minimal risk. I will put my stop loss at 2.12.

Extract of the financials an the chart is shown below.

For me playing the market at JIJO level seems to be the best, especially if I look at some losses I have made using the buy and hold method. Getting in love with a stock is not worth it for now. Just as I am writing this, I too am placing my order by e-mail to my brokers for execution tomorrow.


CAUTION: This is my personal opinion. The sources of data are assumed to be correct, but you may need to do your own verification of the facts. For any chart analysis, I am available for assistance.

No need to call any registrar or stockbroker to be entitle to your dividend. The purchase before the ex-div ate is the determining factor and your contract note for the purchase will always confirm the date of transaction. Finito,

22/23 May 2017. likely to be quiet days in the market as major players will be waiting for the MPC decision for the April 2017 Meeting. A good time to enter some equities on pull back.


From Afrinvest Report:

Pre-MPC Note: Maintaining Status Quo While Consolidating on FX Market Gains
Next week Monday and Tuesday, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) will be meeting to review major developments in the global and domestic space since its last meeting. This 3rd meeting in 2017 is coming at a time when the global economy is viewed to be in a sweet spot following respite in global downside risks related to the US elections, Brexit uncertainty and concerns of slower growth in China. The impact of the expectations of expansionary fiscal policy is evident in the bullish trend in US equities as well as a stronger dollar. Yet, expectations of an expansionary fiscal policy by Trump’s Administration has led to a rate hike by the US Fed as well as expectation of further rate increases in 2017. Commodity prices have also remained strong since the last MPC meeting while OPEC’s May 25th meeting on oil production cut agreement should further support price at this level. We expect that an extension of the production agreement will continue to keep oil prices around US$48.00 – US$53.00 in the near term despite the threat from shale oil production in the US and Canada.

On the domestic front, there are a number of noticeable signals of a potential rebound in economic activities from Q2:2017. April’s Purchasing Managers’ Index (PMI) which settled at 51.1 points highlighted an improvement in overall business activity and reaffirmed that the economy is on its path to recovery. Also, there has been improvement in government finances occasioned by increase in domestic oil production as well as stability in global oil prices. Similarly, there has been significant improvement in the FX management which in turn has led to a remarkable improvement in FX liquidity. The CBN has continued special wholesale and retail interventions as well as the introduction of the SME window and Investors’ & Exporters’ FX window in which transactions are executed at a market determined rate (NAFEX). Consequently, rates at the I&E window and the parallel market have witnessed a convergence with NAFEX and parallel market rates closing at N381.04/US$1.00 and N381.00/US$1.00 respectively on May 18, 2017.

Relatedly, the pace of increases in Headline inflation has been on a downtrend since February, largely due to high base effect from 2016 and more recently the improvements in FX liquidity. April inflation data released during the week showed Headline inflation easing marginally from 17.3% in March 2017 to 17.2%. Core inflation continued to ease, settling at 14.8% in April 2017 from 15.4% in March. Food inflation however remained a concern, surging to 19.3% in April despite the improvement recorded in imported Food sub-index which moderated to 17.0% in April from 18.1% in March, highlighting continuous pressures in domestic food prices. However, Q1:2017 GDP data (anticipated to be released next week Tuesday) is expected to show that the economy ended the first quarter still in a recession (Afrinvest estimates 1.0% contraction), though we expect a rebound in Q2:2017 GDP due to an improvement in oil production volumes and an uptrend in the services sector.

Interestingly, the impact of the improvement in liquidity and management of foreign exchange has been evident in the performance of the equities market – which surged to a 10-month high of 28,873.44 points – as foreign investors have started returning to the market while domestic participation has also improved.

Accordingly, analysis of the various interesting developments within the economy over the last two months suggests that the May MPC meeting is to “mark attendance “as we are of the view that the Committee would be likely satisfied with the recent traction the economy garnered. Whilst the MPC will likely be comfortable with rate convergence between the street and NAFEX, the Committee would reason the need to charge the CBN to revert to the recommendation on flexible foreign exchange framework which was approved since the May 2016 Meeting.

Whilst the recent downtrend in Headline inflation, especially the satisfactory moderation in core inflation from 18.1% in Dec-2016 to 14.8% in April-2017, could justify a rate cut, we are of the view that the MPC will resist this temptation as this may be premature. Also, reducing MPR at this time will not necessarily reduce the risk perception of the country more so that a higher rate environment would further dampen bank’s appetite towards real sector lending. Similarly, reducing Cash Reserves Ratio (CRR) defies monetary policy logic given the frequency of weekly OMO mop-ups at a significantly high cost. The latest data show that as at March 2017, Commercial Banks’ Reserves with the CBN settled at N3.3tn with CRR at 22.5%. If CRR is reduced by 2.5% to 20.0% for example, a total injection of N366.0bn would be pumped into the system immediately. It will be therefore counter intuitive to reduce CRR that is at no cost to the CBN only to mop-up with OMO at expensive rate. On the flip side, our analysis completely rules out the possibility of a hike in CRR.

Afrinvest Research is of the view that the argument for maintaining status quo and consolidating on recent positives in the economy will be overriding at this May Meeting. On a balance of considerations therefore, we vote for:
I. Retention of MPR at 14.0% with the Asymmetric Window at +200 and -500
II. A hold on CRR at 22.5%; and
III. Retention of Liquidity Ratio at 30.0%; and
We reason that the convergence of multiple FX windows into one truly flexible market determined FX structure will further boost investor confidence and buoy foreign portfolio inflow into the country.

Global Market Review and Outlook
In the global scene this week, performance of various equity indices was majorly hinged on political developments especially in the US and Brazil. In anticipation of the the next FOMC meeting in the US, expectations of a Fed fund rate hike have continued to mount even as economic data have shown some weaknesses in the broader economy. Performance across global equity indices under our coverage was mixed across regions. In the developed markets, the US indices trended lower as the S&P 500 and NASDAQ declined 1.1% W-o-W apiece while the UK FTSE appreciated 0.4% W-o-W on account of reduced uncertainty amongst investors regarding the upcoming “leadership” election on June 8th with polls indicating the conservatives are ahead.

In the BRICS markets, the Brazil IBOVESPA plunged 9.7% W-o-W as the ongoing political tensions dragged activities during the week; notably, trading activities were halted briefly on Thursday. Likewise, the Russian RTS depreciated 0.5% W-o-W partly due to concerns with regards to Russia’s relationship with the US. However, the Chinese SHANGAI COMPOSITE inched 0.2% higher W-o-W amidst speculation of policy makers attempting to manipulate market activities.

Across the Eurasian region, performance was broadly bearish as all indices depreciated save for the Hong Kong HANG SENG which appreciated 0.1% W-o-W. The France CAC 40 and German DAX dipped 1.6% and 1.0% respectively W-o-W. Similarly, the Japan Nikkei fell 1.5% W-o-W despite the economy’s fifth consecutive quarter of GDP growth, the longest expansion witnessed in a decade.

Performance across the African markets was positive as the Egypt EGX and Ghana GSE Composite appreciated 0.4% W-o-W apiece. The Nigerian All share Index, however, slid 0.3% W-o-W due to profit taking on stocks that appreciated over the past weeks while the Kenyan NSEASI closed flat.

Equities Market Review and Outlook
Since the announcement of the Investors’ & Exporters’ (I&E) FX window on the 21st April, 2017, the equities market has witnessed a significant increase in activity level. Comparing average volume and value of transactions in the 3 weeks preceding the introduction of NAFEX with the last 3 weeks of its operations suggests that Average volume and value surged 97.7% and 214.7% from 213.4m and N1.4bn to 421.7m and N4.2bn. This has been on account of the improvements in the forex market as well as some improvement in macroeconomic fundamentals which had hitherto discouraged the inflow of Foreign Portfolio Investments. Consequently, the benchmark index rose to a 10-month high last week Thursday; instigating a round of profit taking by investors on stocks that significantly appreciated. Unsurprisingly, the Bourse capped its 4-week bullish run as the Benchmark Index declined 0.3% W-o-W to close at 28,113.38 points, while YTD gain pared to +4.6%.

Equities performance in the week was hauled by price depreciations in market bellwethers as well as some mid cap stocks - FIDSON (-6.8%), MOBIL (-5.0%), NIGERIAN BREWERIES (-3.4%), DANGCEM (-1.2%) and LIVESTOCK (-7.9%) with investors ceding N26.6bn as market capitalization contracted to N9.7tn. Activity level was however mixed as average volume fell 30.2% to N454.1m while value traded rose 13.6% to N6.5bn.

Performance across sectors was bearish as 3 of 5 indices declined. The Banking index topped the gainers’ chart, up 2.6% W-o-W as a result of gains in UBA (+9.6%), GUARANTY (+5.0%) and ACCESS (+1.9%) while appreciations in NEM (+6.2%), LINKASSURE (+11.5%) and CUSTODYINS (+1.2%) buoyed the Insurance index to appreciate 0.4% W-o-W. On the flip side, the Oil & Gas index fell the most, down 3.3% W-o-W on account of depreciations in ETERNA (-8.7%), MOBIL (-5.0%) and FORTE (-5.0%). Similarly, the Consumer and Industrial Goods indices fell 1.5% and 0.1% respectively W-o-W on account of depreciations in NIGERIAN BREWERIES (-3.4%) and DANGCEM (-1.2%).

In line with tempered sentiment, market breadth waned to 1.0x (from 5.0x in the previous week) as 29 stocks advanced against 29 that declined. The best performing stocks for the week were MAYBAKER (+14.8%), LINKASSURE (+11.5%) and UBA (+9.6%) while the worst performers were AIRSERVICE (-13.2%), CILEANSING (-11.8%) and DIAMOND (-11.0%). Quite in line with our expectation, the market witnessed a great deal of profit taking this week. Notwithstanding, we expect investors’ interest in equities to stay strong as the improvements in FX persist.

Bond Market Review and Outlook
In a turn of fortunes for the bonds market, performance this week was largely bearish as marginal upticks in yields were recorded on all trading days of the week. Activity level stayed soft on the back of the increasing appetite for equities given the recent rally. Accordingly, average yield across benchmark instruments stayed flat at 16.1% on Monday (same as the previous Friday). However on Tuesday, investors sold off on the JAN 2022, JUL 2030 and MAR 2036 instruments, hence average yield rose 3bps. The bearish trend was sustained on Wednesday as investors’ appetite shifted away from mid and long tenored instruments, further pushing average yield 3bps northwards. Trading activities on Thursday mirrored the previous day and the bearish trend lasted all through the week as average yield settled at 16.2% on Friday, up 10bps W-o-W. In the coming week, we expect performance to remain bearish as investor sentiment stays soft.

Performance of the Sub-Saharan African sovereign Eurobonds market was broadly mixed during the week. Across the Nigerian instruments, investors sold off on 2018 and 2032 instruments, though the impact was muted by increased buy sentiment in the 2021 and 2023 instruments. Similarly yield on the South African 2017, 2019 and 2041 instruments rose during the week while Investors’ interest remained centered on the 2020, 2022 and 2024 instruments. This mixed trend was mirrored across all the markets under our coverage save for Ivory Coast as sell-offs were recorded on all instruments. The Kenyan 2024 Eurobond remains the best performing instrument, up 7.9% YTD.

Similarly, performance of the Nigerian Corporate Eurobonds was mixed but largely bearish as yield on all instruments save for the GUARANTY 2018, ACCESS 2021 and ZENITH 2021 which fell 10bps, 6bps and 1bp respectively rose W-o-W. In a related development, Zenith bank recently announced plans to raise US$500.0m Eurobond which is the second tranche of its US$1.0bn global medium term note programme launched in 2014. We expect this to be largely successful given the current developments in the Nigerian Eurobond space.

Money Market Review and Outlook
In the money market, the CBN continued with its tightening stance as OMO auctions were conducted on 4 days during the week despite the tight financial system liquidity. Liquidity levels were pressured by the CBN’s SMIS auction in the week and as such activities were largely determined by system liquidity dynamics. At the start of the week, financial system liquidity settled at a deficit of N51.9bn implying a N39.6bn moderation from the previous Friday. Accordingly, Open Buy Back (OBB) and Overnight (OVN) rates jumped to 48.3% and 53.3% from 27.5% and 29.5% respectively in prior week. On Tuesday however, rates marginally moderated but the uptrend continued on Wednesday as OBB and OVN stood at 62.5% and 66.8% respectively. By Thursday, an OMO maturity of N87.0bn which hit the system slightly buoyed liquidity level as OBB and OVN dropped to 58.3% and 65.0% respectively. Eventually, money market rates - OBB and OVN rates closed the week at 23.3% and 26.1%, down 4.2% and 3.4% W-o-W.

Similarly, bearish sentiment filtered into the Treasury bills market as lower liquidity levels pressured activity. Consequently, average yield rose on all trading sessions of the week. At the start of the week, investors sold off on short to medium tenored instruments in anticipation of higher rates at the Primary Market Auction to be conducted on Wednesday. Accordingly, average rates rose on Monday and Tuesday and eventually settled at 19.0% on Wednesday. At the auction, N32.4bn of the 91-day (Allotted: N32.4bn, Rate: 12.5%), N22.8bn of the 182-day (Allotted: N22.8bn, Rate: 17.1%) and N55.7bn of the 364-day (Allotted: N55.7bn, Rate: 18.7%) instruments were sold. In line with trend, all the instruments were oversubscribed by an average of 1.6x. Average rate across tenors eventually closed the week at 19.2%, indicating 0.6% increase W-o-W.

In the week ahead, we expect money market rates to trade in double digits barring any major inflow into the system. We also expect OMO maturity of N119.1bn to impact liquidity levels whilst not ruling out the possibilities of OMO auction by the CBN to mop up liquidity.

Foreign Exchange Market Review and Outlook
Improvements were recorded at the various segments of the Nigerian foreign exchange market during the week. At the Official market, the CBN conducted its weekly SMIS auction offering US$100.0m for spot and short tenored forwards as well as continued its daily FX interventions in order to stabilize rates and improve dollar liquidity. As a result, rates at the interbank market appreciated from N304.60/US$1.00 at the start of the week to settle at N304.45/US$1.00 on Friday.

Notably, benefits of the launch of the Investors’ & Exporters’ (I&E) FX window were further buttressed during the week as a somewhat convergence between the NAFEX rate (N381.04/US$1.00) and the parallel market rate (N381.00/US$1.00) was established on Thursday. NAFEX rate eventually settled at N380.90/US$1.00 at the end of the week from N381.51/US$1.00 on Monday while parallel market rates closed the week at 381.00/US1.00, up 1.3% from N386.00/US$1.00 on Monday.

At the FMDQ OTC futures market, trading activity level remained low relative to the period prior to the announcement of the I&E window. Accordingly, value of open contracts rose by US$23.8m to settle at US$3.5bn (similar to the previous week). Next week, the CBN will be settling US$253.6m in value of open contracts of the maturing NGUS MAY 24 2017. We expect the Apex Bank to issue a new 12 month MAY 2018 instrument to replace the maturing instrument.

In the week ahead, the MPC will be holding its 3rd meeting in 2017 and we believe the operations of the FX market especially on the recent gains in FX administration will dominate the discourse. However, we do not think there would be a major shift in the current management of the FX market given the massive success and acceptance of the I&E window. We expect the CBN to continue to consolidate on these gains while sustaining its current momentum at the FX market; hence, we expect rates to remain stable next week.

Above report is from Afrivest Weekly Report

Once you have bought the share before the ex-div date and you are still holding the shares up to the ex-div date you will get the dividend declared. You need not do anything.

Hi Loco,

I missed out in the last celebration. Therefore,this time I am sending my Access Bank Account Number- 0018266096- Name is Yusuf

NEW HIGH AND LOW 16 MAY 2016

EQUITY DATE
INTBREW 05/16/2017 HIGH
JAIZBANK 05/16/2017 LOW

NEW HIGH AND LOWS/USE OF ALOGRITHM - 16 May 2016.


Ticker Date/Time Break 52 Week
JAIZBANK 05/15/2017 LOW
LAWUNION 05/15/2017 HIGH
NEIMETH 05/15/2017 LOW
PRESCO 05/15/2017 HIGH

The recent fall in prices was fairly scary to me. I had to go back to my toolbox, to pick up one of the algorithms we used around 2013 to catch the reversal in Honywell Flour. Be on the lookout. I have exited the Nahco share for now (I called it a short time play), but may re-enter when prompted by my logarithm. I need to catch a falling knife successfully, with this retracement, Insha Allah, it must result in profit.

By next week I will start unveiling what the algorithm is telling me, which will further be distilled with the necessary technical analysis toll.

Caution: Investing is a risky venture. This is just my opinion and I cannot be liable for any loss suffered as a result of following this recommendation All data used are assumed to be correct, but you may need to verify some of the figures independently.

52 Weeks High and Low

Ticker Date/Time Security Break 52 Week
JAIZBANK 05/15/2017 JAIZBANK LOW
LAWUNION 05/15/2017 LAWUNION HIGH
NEIMETH 05/15/2017 NEIMETH LOW
PRESCO 05/15/2017 PRESCO HIGH

to have some knowledge of technical analysis seems good. The Fibonacci analysis on WAPCO delayed my exit by one day and stock is now above my stop. However, my stop still stands (sell a day after the stock goes below my stop loss level, for WAPCO, this remains NGN46.00, but I will move the up if the stop continue to advance).

Going over to check the next resistance level on NSE all share index and UBA. These are my observation:
UBA- 7.73
NSE All Share: 30683.16- Heavy money has entered the market

My current take profit levels:

NAHCO- 3.14
Eterna- 4.29

Disclaimer: Investing is a risky venture. This is just my opinion and I cannot be liable for any loss suffered as a result of following this recommendation All data used are assumed to be correct, but you may need to verify some of the figures independently.

The market seems to have left some stocks behind. If I find myself in such equity, my emotions may run high, but once your rule are broken, sorry one just need to part ways with the stock. I bought WAPCO recently, barely 2 weeks ago to be precise. Price bought including commission was NGN52.90, finally as regards whether to sell or not, to my ultimate surprise, the current closing price is just siting on the 50% Fibonacci retracement.

With this my mind is super made up to exit this loss making stock from my current holdings.
Also I have set my take profit exit for some other equities as follows:
Newrest Airservice- 4.08- This luck has ran enough. FBNH can replace this comfortably.

[b]HUNGRY FOR SOME GAINS IN THE MARKET

Kudos to the people in this forum, the ideas are good and show of brotherly concern wonderful .I have just gone through a number of charts. To my surprise, despite the bullishness of the market, the money flow into so many equities is down. What this is telling us is that we should be ready to take some profits. I reviewed charts like Fidelity, UBA, Afriprud and FBN among others.

After my review, I find better risk to reward in buying FBNH. The daily charts disappointed me this time around, I had to go with the weekly charts. FBNH price is at such a level that the bullish divergence to support an upward move is so much there, price is about to cross the 50day EMA (20 day EMA already crossed). It seems this elephant will move this time around. I can't remember the last time I ever felt this way about First Bank. For this trade my stop loss as usual will be 10% of the current price, looking at the chart I believe this trade fails if the price goes below NGN3.17. For my gain, I look for about 30% from the entry price.

I wish all save investing. If you want me to comment on a particular equity, no problem I am available. Just tag me on this forum.

Caution: Investing is a risky venture. This is just my opinion and I cannot be liable for any loss suffered as a result of following this recommendation All data used are assumed to be correct, but you may need to verify some of the figures independently.

Some stocks in strong uptrend. Strong up trends present less risky opportunity. But, the problem is that you may not experience big gains immediately. On many occasions I have got into equities that seem to be trending, but had to exit in a short period as I was hit by nearly 10% loss within 2 weeks. But, don't worry, I will not recommend a stock that can reverse so fast. Today i will give one, it is for the long term.

You can expect more. PRESCO is it for today. Removing ban on 41 items will not affect a stock like this. Then, the hidden secret again!!!, if the equity reduces in price, there are foreign funds that will pick up the shares (I stop here for now). The price is at a good buying point. However, maximum stop loss to be NGN39.00 as this is a medium term play.

Although one should be careful of stock that do not trade in big volume. For some unknown reason, I did a quick read through the whole Financials of Newrest ASL. I was dumbfounded by what I saw. The company was borrowing at Negative pledge from the banks and the cash holding in USD at over USD1billion This company has enough ammunition to undertake more new projects and also increase profitability. As we expect the 1st quarter result, if the 1st quarter result is less than that of the previous year, I will be surprised.

However, my olofofo chart below has anticipated a fall in price in the short term, as shown by the aftermarket price. I will sell if price goes below 3.74. If the market smile on this stock. NGN5.00 is a good target.

He Locodemy, there seems to be a big party here. I no run o. UBA 2077078168

Hi,

I am looking at some of the results being declared. The recession seems to have favored some companies that can easily pass their cost to the consumers. For the main Agricultural/Cement sector, the companies seems to be making a killing. Same goes for those businesses generating forex. However, I see some easy money in NAHCO.

Although this is not a trade for the fearful or the investor it is for the traders only), it reminded me of the short rally in Ikeja Hotel. I have previously sold my holdings, but recent performance is indicating that it is possible for this stock to rally. The risk of the trade is small. My stop loss will be at 2.23 an profit target at 2.90

With the 20ema just above the 50ema. There seems to some strong level of support at the level of the moving averages. Recent volume too is not bad. See the chart which tells all the story.

Hey, Seems I am back to following stocks again. Have gone for some extra study. Now back to investing like a professional. Hold about five stocks at a time. I wont say I made money. but the market has been very tempting. From next week, if FO goes above the NGN44.70 mark, I will be a buyer.

I find this website to be good. http://capitalassets.com.ng/index.aspx

You can check these 2 sites. They have technical updates daily/weekly=
http://trwstockbrokers./category/nigerian-stocks-technical-analysis-signals/
http://www.scribd.com/doc/124056617/SIMPLE-STOCK-SELECTION-SYSTEM-THAT-MAKES-MONEY