Weekly Market Update. The Bulls Reclaim the Mantle. JAPAULOIL Gains 50.00% W-o-W

Transcription

1 Weekly Market Update The Bulls Reclaim the Mantle JAPAULOIL Gains 50.00% W-o-W

2 The Bulls Reclaim the Mantle JAPAULOIL Gains 50.00% W-o-W Following the 0.16% loss witnessed in the previous week, the NSEASI index advanced by 0.72% this week as positive market sentiment was regained. Market breadth closed positive at 1.06x as more stocks closed on a bullish note Stocks in the oil and gas space witnessed the most buying pressure, with JAPAULOIL taking the lead to close at NGN0.63. While most NSE indices closed in the positive territory, the banking sector reversed its prior week s gain with the NSEBNK10 index closing in the red zone after shedding 0.59% W-o-W. Consequently, market cap closed higher at NGN15.40trn while the Year-to-Date return on the bourse settled higher at 12.11%. We expect the current trend to be maintained in the coming week. Weekly Sector Analysis Consumer Goods Sector: NASCON Tops the Gainers Chart During the week, the bulls maintained their charge on the prices of a number of medium and bellwether counters. As a result, tickers like NASCON (+15.82%), UNILEVER (+5.64%), FLOURMILL (+1.82%) and NESTLE (+1.60%) recorded price advancements from their previous week s close. The losses witnessed on counters like DUNLOP (-13.64%) and HONYFLOUR (-6.55%) and GUINNESS (- 4.96%) were insufficient to place the sector in the red zone at the end of the week. The NSE Consumer Goods index closed north by 0.89% W-o-W due to the increase in investors appetite for some stocks in the sector, including bellwethers NESTLE and NB. However, the sector breadth closed negative at 0.86x as there were more losers than gainers in the week. Due to the bullish close, the Year-to-Date (Y-t-D) return on the NSEFBT10 settled at 0.63%. We expect to witness buying pressure on a number of counters, albeit with sell-offs on stocks like UNILEVER which currently trades deep in the overbought region. Banking Sector: Six Advancers, Eight Laggards The NSE Banking index pared 0.59% from the previous week. The sector breadth closed negative at 0.75x as a total of six (6) counters witnessed price appreciation while eight (8) counters recorded price declines. UNITYBNK topped the weekly gainers chart as bargain hunters took advantage of the price shedding witnessed previously. As a result, the counter gained 18.79% to close at NGN1.77. Other gainers included FCMB and ACCESS while DIAMONDBNK (-12.16%) topped the weekly losers chart in this space. As a result, the Year-to-Date return on the NSEBNK10 index declined to 20.63%, albeit outperforming the market. In the coming week, we expect to witness positive sentiments on a number of highly capitalised counters like GUARANTY. For DIAMONDBNK, although the counter topped the losers chart this week after shedding 12.16% W-o-W, we anticipate further profit-taking on the counter, with possible bargain hunting at the end of the week.

3 Insurance Sector: NEM Advances by 18.42% Week-on-Week The bulls outstripped the bears in this space during the week, causing the NSE insurance index to incline by 150bps during the week. The sector breadth closed negative at 0.67x with six (6) gainers and nine (9) losers respectively. Hence, the Year-to-Date return on the index closed north 13.73% at the close of trades this week. NEM, HMARKINS and CONTINSURE were amongst the counters which topped the gainers list while profit-taking was observed on counters such as; SOVRENINS, UNIC and AFRINSURE. In the coming week, we expect to witness slight profit-taking on NEM which currently trades deep in the overbought region with an RSI of Oil and Gas Sector: Sector Breadth Closes at 6.00x The oil and gas sector index recorded the highest advancement during the week to close at points (+1.64%) at the close of trades this week. Investors remained bullish on JAPAULOIL as the counter closed as the overall top gainer in the bourse this week after gaining 50.00% during the week to close at NGN0.63. With an RSI of 82.62, we advise investors to trade with caution due to possible profit-taking on the counter in the near term. Following the bullish close, the Year-to-Date return on the NSE Oil and Gas index closed higher at 7.16%. In the coming week, we expect to witness some degree of sell-offs on counters which have witnessed significant price appreciation. NSE Market Indices Return Index Daily Return (%) Weekly Return (%) Year to Date Return (%) NSE All Share Index 0.08% 0.72% 12.11% NSE Banking Sector Index 0.80% -0.59% 20.63% NSE Industrial Goods Index 0.72% 1.25% 17.24% NSE Consumer Goods Index -1.41% 0.89% 0.63% NSE Oil & Gas Index 2.14% 1.64% 7.16% NSE Insurance Index 0.48% 1.50% 13.73%

4 Weekly Market Movers 60.00% 50.00% 50.00% 40.00% 30.00% 20.00% 10.00% 18.79% 18.42% 17.80% 16.00% 15.82% 11.36% 9.81% 9.27% 7.63% 0.00% FCMB CONTINSURE CONOIL CUTIX NASCON HMARKINS CCNN NEM UNITYBNK JAPAULOIL 0.00% -5.00% SOVRENINS UNIC MULTIVERSE FTNCOCOA AFRINSURE DUNLOP DIAMONDBNK ROYALEX COURTVILLE CAVERTON % -9.38% -7.92% % % % % % % % % % % %

5 Definition of Terms Weekly Equities Market Review Moving Average Convergence Divergence (MACD): It shows the relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. (Source: Investopedia) Relative Strength Index (RSI): It is a technical indicator used in the analysis of financial markets. It is intended to chart the current and historical strength or weakness of a stock or market based on the closing prices of a recent trading period. The indicator should not be confused with relative strength. (Source: Wikipedia) Bollinger Bands: Bollinger Bands are a volatility indicator similar to the Keltner channel. Bollinger Bands consist of an N-period moving average (MA) an upper band at K times an N-period standard deviation above the moving average (MA + Kσ) a lower band at K times an N-period standard deviation below the moving average (MA Kσ). (Source: Wikipedia) Candle sticks: A candlestick chart (also called Japanese candlestick chart) is a style of financial chart used to describe price movements of a security, derivative, or currency. Each "candlestick" typically shows one day; so for example a one-month chart may show the 20 trading days as 20 "candlesticks". (Source: Wikipedia).

6 MorganCapital Securities Limited ("MorganCapital"), formerly known as International Capital Securities Limited, was incorporated on 28th January, 1997; and was issued a license as a Dealing Member of the NSE on 3rd October, 1997, after obtaining license of the Securities & Exchange Commission (SEC) as a Broker/Dealer. The Company has remained a dealing member firm of the NSE since then (over 17years ago). In 2009, MorganCapital got licensed by the SEC to perform an additional role as an Issuing House/Financial Adviser. MorganCapital was recently accredited by the Nigerian Stock Exchange as a Designated Adviser to the Alternative Securities Market (ASeM) Board, after a very rigorous and competitive process. MorganCapital is a full fledge Investment Banking, Securities Trading and Principal Investments Firm, with licenses from the Nigerian Securities & Exchange Commission and the Nigerian Stock Exchange. MorganCapital provides a comprehensive range of investment banking and financial advisory services to private, public sector, corporate, and institutional clients. In the past 15months (up to March, 2013), our Firm has participated in fund raising programs that assisted State Governments in Nigeria to raise over N110bn in Bonds (either as Issuing House/Stockbrokers/Placement Agents). We have also assisted numerous private sector organizations in accessing funds from the Capital Market. Our firm has very strong contacts with many African-focused & emerging markets investors/fund managers. MorganCapital has advised on a number of transactions in the Nigerian Capital Markets, including provision of Financial Advisory Service to the Federal Government of Nigeria, through the Bureau of Public Enterprises ("BPE") for the concessioning of the National Arts Theater, the Tafawa Balewa Square, the Lagos Trade fair complex and the 6 National Stadia. MorganCapital also advised the BPE on the proposed sale of the Ijora Power Plant, the Calabar Power Plant and the Oji River coal-fired power plant. Our group is focused on providing unbiased financial advisory and investment banking services to individuals and institutions that are seeking to invest in Africa or already involved in investing in Africa. One of our goals is to be the BEST link to the Nigerian Capital Market. CONTACT US Research Favour Usifo favouru@morgancapitalgroup.com Investment Banking Adewale Adetiba adewalea@morgancapitalgroup.com Kehinde Olasehinde kehindeo@morgancapitalgroup.com Securities Dealing Ogochukwu Njoku ogochukwun@morgancapitalgroup.com Michael Joel michaelj@morgancapitalgroup.com For further information, please contact: MorganCapital Securities Limited The Pent House 3 Biaduo Street, Off Keffi Street S/West Ikoyi Lagos, Nigeria Tel: 234-(1) , 234-(1) info@morgancapitalgroup.com Disclaimer: This report by MorganCapital Securities Ltd is for information purposes only. The company and its employees do not guarantee the accuracy of the information provided as such information was gathered from primary and secondary reliable sources. We, therefore, do not take responsibility for any loss arising from the use of the information.