Nigeria’s market and economic outlook for 2018 second quarter (Q2) remains unpredictable and unstable as institutional and foreign investors gradually exit their positions ahead of the 2019 general election and unclear monetary and fiscal policy in the last quarter, which was of serious concern for investors. The sustainability of the rebounding crude oil price in the international markets as uncertainty over the Organisation of Petroleum Exporting Countries (OPEC) managed price movements in the face of political instability and unpredictability as big money is looking for better returns. The continued firming up in the global economy offers good prospects in the midst of challenges and optimistic outlook for global growth forecast which appears to be re-balancing in the face of expected trade war due to the recent tariff on steel and aluminum by US government.
The relative peace and security in the nation’s Niger Delta region and stability of oil output has supported the upside in the nation’s revenue, economic health and wellbeing which if not sustained in this pre-election year may reverse all the progress recorded so far.
As the second quarter begins, more positive economic data are expected, especially inflation figure for March and GDP expected to confirm that the economy is on the path of growth or slowing down.
As the earnings season for 2017 full year reporting officially comes to end, company fundamentals are assessable as they are in the public domain, besides the situation of the market and other economic fundamentals to help investors make investment decisions about where and when to be in and out of particular stocks. This is especially true with the first quarter earnings reports expected in the market this April and beyond.
Traders and investors who understand the operations of the stock market should take this opportunity to position in some sectors for medium to long term gains, especially in the consumers goods, banking, insurance, agribusiness, service sector and industrial goods.
The recently published full year financials of many listed companies will help to project whether the company is likely to post a better Q1 or not, after studing the quarterly earnings trend before buying into the stock.
Equity price movement as we have always noted in INVESTDATA, is a function of earnings. This is in addition to information emanating from these companies, which are expected to attract more market players, dividend investors and possibly foreign bargain hunters to the market. In the Nigerian stock market, the month of April is the peak period of quarterly earnings season which suggests that traders should be in the market before the quarterly numbers start rolling in. it is very dicey at this point to predict up market in April or second quarter due to uncertainties that goes with pre-election year especially when the election date is coming closer at the end of first-half.
What to expect in April and May 2018
• More quarterly and few full year earnings would be released. Earnings from blue-chip companies may strengthen market fundamentals, if positive.
• Expect more volatility as sell down may continue if the political environment becomes tense.
• The source of funds in the market may cause continued fluctuations, given that both local and foreign institutional investors trade in the market. The up and down movements will continue, depending on a combination of economic and company fundamentals.
• Investors are expected to reshuffle their portfolios to invest in equities with strong fundamental and prospects of growing their earnings going forward.
• Expect a more vibrant market as a result of market players positioning for second quarter, even as we expect liquidity to improve.
• Market outlook for these months are dicey being pre-election year, but invest wisely, using dates, bids, offers and volume when taking decisions.
• Managing risk and protecting capital at this point is very important, so you will be able to determine when to buy or sell by watching the stocks and the market, using technical analysis.
• Let numbers emanating from companies guide your decisions and how long you stay in that position.
As the market phase is changing, this is the time to combine fundamentals and technical tools to take decision by knowing the support and resistant level to reposition or exit any position.
Investdata Trading and Investing education train move to Abuja on April 14, 2018, at Chida International Hotel, Plot 224 Solomon Lar Way, Utako District. Abuja for a discourse on “the Power of Fundamental and Technical Analysis In Protecting your Capital In Pre-Election Year and Beyond” from 10.00 am to 3.00 pm.
While access to the workshop is free, you are required to purchase a minimum N5, 000 worth of INVESTDATA comprehensive stock market trading materials to enhance your knowledge of equities for profitable investing. For more details, call or send “YES” to 08032055467, 08028164086 or 08111811223.