Tuesday, December 18, 2012 / The Analyst
2012 Review: Nigerian equities experienced the unusual and unrelenting bargain hunting in the early periods of the last month of the year - December; the period that most investors would have envisaged more of profit taking sessions.
Traditionally, December is usually associated with cautious trading along with continuous sell activities as most fund managers and institutional investors seek to rebalance and reshuffle portfolio in the act of closing the books for the year during this month.
This year, unparallel active bargain hunting drove the market index up by above 1000 basis points in fourteen (14) days (Dec 1st -Dec 14th). This active accumulation trend would indicate activities from value investors, smart money and fund managers in the market - a pointer to attractive valuations of the market or key value stocks while the market sentiments firmly hinting the market that the storm may be over completely, building up to the new beginning and this might hopefully stoke a full market recovery in the coming year.
Tracking market trends technically while we give credence to the cycle theory, the outlook reveals that the Nigerian market is completely out of bottomed-out stage as the level of accumulation pattern has significantly moved northward. This technically further suggests that prices are likely to be recording higher highs in the coming periods as the mark-up phase sets in.
We present below an analytical review that reveals the winning and laggard stocks in the year.
Year-to-date, the equities market recorded 55 winning and 65 laggard stocks to put the market breadth in a weak posture. Further analysis affirms that the consumer goods and financial services sector(s) as the investors’ toasts thus far in 2012, closely followed by equities in the Industrial and Agricultural sectors.
WINNERS - The Top 20
A cursory review of the winning stocks (see table below) revealed a value investing and cautious approach by investors in the year as most of the investors’ toasts were defensive stocks. The key sectors are: Consumer Goods and Financial Services sectors record 31.58% while Industrial and Agric sectors record 15.79% & 10.53% respectively.
It was equally observed that market-making stocks dominated the “Top 20” table with 60% stake, which shows that market making had a significant impact on the market outlook so far.
LAGGARDS - The Top 20
Analysis of the profile of the laggard’s table revealed stocks of Oil & Gas sector to be the more unprofitable stocks so far in the year, weighing down the potentials of the market towards market recovery.
This shows that investors have been reducing their stakes considerably in the sector for the reasons that cannot be isolated from weak cash-flow in the industry as revealed and published recently by Proshare’s TheAnalyst - Cash-flow Challenges Cast Dark Cloud Over Oil & Gas Stocks as Sector Bleeds
Find below the complete table of market performance in the year.
About the Authors:
Taiwo OLOGBON-ORI is an analyst in Proshare and Reshu BAGGA is a Director for The Analyst & COO, Technical Services.
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