Wednesday, April 20, 2016 6.38 PM / TheAnalyst
The general market sentiments remain largely bearish as stocks significantly under-performed leading to a fall in market value; further to the 17.36% loss booked in 2015. To put in layman terms, the bears that dominated market throughout 2015 are still very much around and these large number of stocks are still in the woods with as much as 41.11% of stocks traded so far in the year 2016 still bleeding in negative zone.
Nigerian equities experienced a pull-back in recent weeks as stocks continued its constant adjustment to volatility in the economic space and the possibility of Nigeria being delisted from the MSCI’s Frontier Market Index due to illiquidity in the nations FX Market. The market awaits the end of month decision by MSCI with clouded optimism.
Beyond the uncertainty overhang described above, equities across board are also adjusting to marked-down prices for dividend rewards in an earning season full of highs and lows. According to our latest trend analysis, these actions have really moderated MTD performance in April to negative zone by -2.56% as investors maintained cautious postures towards investment in equities in the last two weeks.
Additionally, the mixed performance outlook in Q1'16 earnings reports so far from key sectors continued to reflect a distressed economic posture, which may/should stoke wary postures from investors to a new high; amid continued lacklustre trading pattern.
In view of this, we have had to dial down our cautious optimism by a notch as we anticipate a negative close for the month of April, all things been equal; halting the sustained recovery trend highlighted in the months of February and March 2016.
To buttress this further, an extensive analysis revealed that the general market sentiments remain largely bearish, while stocks are significantly under-performing with attendant fall in market value; following the 17.36% loss booked by market in 2015. Simply put, the bears that dominated market throughout last year 2015 are still very much around, with a significant number of these stocks, still in the woods.
As at 15th April, 2016, analysis into stocks performance revealed that 41.11% of stocks traded so far in the year 2016 are in the negative zone, i.e. they are recording negative growth in market value. Of this number, 13.33% have erased/erasing previous YTD gains while 27.78% of same sample size are adding more losses to previous YTD loss positions.
To put the situation in perspective, these stocks remain unattractive at the moment.
Out of the Woods?
Yet, an extensive analysis of the market performance revealed twelve (12) stocks (out of 180 stocks examined) coming out of the woods, defying general market sentiments to record impressive gains so far in the year. Importantly, majority of these performing-stocks have erased huge losses recorded during the bearish year 2015.
Further, analysis revealed other equities that have sustained positive growth in market value from last year till April 15th 2016. From a technical standpoint, we can submit that these are stocks that are on the investors’ radar for now.
Conclusively, we would like to submit that, as market continues to re-value to further reflect realities of a stressed economy, it is important for a retail investor to take an informed decision towards every buy, sell and hold. In this piece, we tried to show you where ‘value’ has shown up so far in 2016.
We commend you to check out further analysis on these stocks, viz:
Out of the WOODS
1. TIGER BRANDS
3. UBA CAPITAL
4. AG. LEVENTIS
9. LEARN AFRICA
10. CAP PLC
11. LAW UNION & ROCK
14. NATIONAL SALT CO
For further details Taiwo OLOGBON-ORI | Equity Research Analyst | firstname.lastname@example.org