NSE Defies logic; Records Pre-election surges

Proshare

Friday, April 10, 2015 10:22 AM / FDC

Market & Politics


*      NSE defies logic and gravity

*      10 day rally 22% gain

*      Pre-election surge was manipulated

Why 10 days of consecutive positive trading?

*      Post- election was a relief rally

*      Earnings growth lagged stock price gains

*      Average market P/E Ratio up to 21.91x

*      Six days of consecutive gains before the March 28 elections

*      Driven largely by manipulation and not by fundamentals

*      Outgoing government perceived as business friendly

*      This was followed by the post-election Bull-hari four-day rally

*      Because the fear factor abated with the GMB victory

*      As stock prices have risen faster than earnings




Political change is not system change

*      Market respite and correction with profit taking

*      Back to basics as market gives back it gains

*      New government cannot act until June

*      Oil prices are still soft

*      Fiscal gap needs funding


March 2015 Highlights

*      NSE ASI gained by 5.48% during the month

*      Bringing YTD return of the index to (8.38%) from (13.14%)

*      Index increased to 31,753.15 points from 30,195.56 points

*      Market capitalization increased to N10.72trn from N10.04trn

*      The average daily turnover decreased by 11.14% to N4.08bn from N4.61bn

*      The market remained volatile while searching for direction

*      Average market P/E ratio increased to 21.91x from 19.71x

*      Banking sector P/E still very attractive at 8.49x

 
The NSE in Q1 2015

 



*      A quarter of volatility for the investors

*      About $11bn of value eroded

*      2013 GDP of Mali estimated at $10.9bn

 

Global Markets Update

*      US stocks in choppy trade

*      Markets react to Federal Reserves views on the economy

*      The Feds offered additional guidance on interest rates hike

*      A maximum 25 basis points increase

*      Investors appetite for emerging markets risk on the rise

*      Dollar weakening while the R’s gained

*      Ruble, Rand, Real and Ringgit advance against the US dollar

 

 


Peer Comparison in Q1 2015



*      The Nigerian bourse’ YTD return still lags its Sub-Saharan African (SSA) peers

*      But the NSE played the comeback kid in March

*      Outperformed it’s SSA and oil-rich Russian and Brazilian peers

*      As market sentiment ignored election induced risks over corporate earnings

*      Setting the stage for the Bull-hari rally

 

  
Sectors Review


 

*      The consumer sector index YTD return is positive

*      Boosted by the NB, NESTLE, UNILEVER and DANGSUGA performances

*      The banking sector index followed a similar pattern due to corporate earnings

*      ZENITH, GUARANTY, FCMB, ACCESS and FIDELITY

*      DANGCEM and LAFARGE’s bounce push industrial index

*      Insurance sector lagging the market

 
Banking Sector Earnings


*      FY’2014 RESULTS SO FAR

*      Total earnings grew by 14.7% to N1.85trn from N1.61trn

*      Pre-tax profit increased by 39.6% to N450bn

*      Earnings growth boosted by naira devaluation gains

*      Average Net Interest Margin rose marginally to 7.47% from 7.21%

*      Largely due to strong growth in loans and advances


Banks - Win Win



Cement - Win Win

 


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