The global economy outperformed most predictions in 2017, and the momentum is expected to continue in 2018. Interestingly thus far, the recovery is broad-based across most advanced, emerging, and developing economies.
Back home, Nigeria’s economy has recovered from the recession of 2016, and is forecast to grow at its fastest pace in two years in 2018. All economic indicators point to positive direction and the sound of downside risks is barely perceptible.
While we share consensus view of broadly better economic prospect, we should also mention, in Nigeria’s case, the strong commodity risk factor backing the outlook. As a result, in this edition of our report on Nigeria and its markets, we discuss the outlook for 2018 in three different scenarios and specifically, the implications of each scenario. We believe this is the best course to take during recovery in a sub-optimally diversified economy, with weak stabilizers. This is the year to “look beneath the surface!”
We base the scenarios on developments that are familiar with Nigeria, and hence, consider each of them a likely occurrence. But on balance, we rank the scenarios 2-3-1 in order of likelihood.
Market Statistics: Wednesday, 24th January 2018
| Market Cap (N’bn) | 15,759.6 |
| Market Cap (US$’bn) | 51.5 |
| NSE All-Share Index | 43,963.40 |
| Daily Performance % | (1.0) |
| Week Performance % | (2.1) |
| YTD Performance % | 15.0 |
| Daily Volume (Million) | 536.4 |
| Daily Value (N’bn) | 5.2 |
| Daily Value (US$’m) | 16.9 |
Equities Market Extends Losses to Third Consecutive Session… NSE ASI Down 96bps
Losses in the equities market were extended into the third consecutive trading session as the All Share Index fell 96bps to close at 43,963.40 points while YTD return further moderated to 15.0%. Accordingly, market capitalization fell to N15.8tn as investors lost N143.0bn.
Although sell pressure was recorded across board, sustained profit taking in banking stocks – GUARANTY (-2.1%), ZENITH (-3.1%) and FBNH (-4.0%) – was the major drag to today’s negative close. Likewise, activity level softened as volume and value traded declined 27.3% and 32.4% to 536.4m units and N5.2bn respectively.
Mixed Sector Performance
Sector Performance was mixed as 3 of 5 indices closed in the red. The Banking index led laggards, closing 3.1% lower following declines in GUARANTY (-2.1%), ZENITH (-3.1%) and ACCESS (-3.9%). Similarly, the Insurance index lost 1.9% on price depreciation in CONTINSURE (-4.7%) and CUSTODIAN (-1.3%) while sell-offs in ETERNA (-4.9%) pulled the Oil & Gas index 0.1% lower.
On the flip side, the Consumer and Industrial Goods indices appreciated 0.5% apiece, buoyed by buying interest in NIGERIAN BREWERIES (+2.1%),NESTLE (+0.3%) and WAPCO (+1.0%).
Investor Sentiment Stays Flat
Investor sentiment as measured by market breadth (advance/ decline ratio) stayed flat at 0.3x – same as yesterday – consequent on 11 stocks advancing against 43 decliners. Today’s best performing stocks were MAYBAKER (+4.9%), TRANSEXPRESS (+4.0%) and WAPIC (+3.6%) while the worst performers were FCMB (-9.7%), DIAMOND (-9.6%) and FIDELITY (-9.5%).
Following three consecutive days of sustained profit taking by investors, we do not rule out the possibility of some bargain hunting in subsequent trading sessions.
