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FINANCIAL MARKET ROUNDUP

Saturday, August 31, 2019

Global ‖ Domestic ‖ Equity market

…Financial Possibilities

GTI Equity Watch List

ASD

ASDSource: Getty Image

Source: CBN, GTI Research

52 53 54 55 56 57 58 59 60

Manufacturing PMI

Production Level

New Orders

Supplier Deliveries

Employment Level

Inventories

Manufacturing PMI

Jun'19 Jul'19 Aug'19

56 57 58 59 60 61

Non-ManufacturingPMI

Business Activities

New Orders

Employment Level

Inventories

Non-Manufacturing PMI

Jun'19 Jul'19 Aug'19

GLOBAL ECONOMY

G7 Summit concludes with no consensus on major global pressing issues

This week, we picked interest in the outcome of some of the key issues discussed at the recently

concluded G7 Summit in Biarritz, France. The annual event which was hosted this year by the French

president and the current head of the G7 forum, Emmanuel Macron, had in attendance, leaders from

other G7 member countries such as the U.S. President, Donald Trump; German Chancellor, Angela

Merkel; Prime Ministers of Canada – Justin Trudeau, Italy – Giuseppe Conte, Japan – Shinzo Abe,

United Kingdom – Boris Johnson, European Union Council President – Donald Tusk, and other guest

invitees.

While discussions were held on issues of global trade dispute, rising global warming, and tax evasion

by international tech companies among others, the response and action of the U.S. president, Donald

Trump, to the issues of trade tension and global warming suggests that rising uncertainties and conflict

of interest may persists in these two areas.

For instance, in the area of de-escalating the current trade tension between the U.S. and China, and

other affected trading partners, the U.S. president, Donald Trump insisted that “though China wants

to make a deal with the U.S., but whether or not the U.S. make a deal, it is going to be a great deal

for the U.S.” This position of the U.S. president which suggest that he’s less interested in reaching a

truce than winning the trade battle we believe will continue to weigh on investments’ sentiment in the

near-to-medium terms.

Likewise, the U.S. president was also reported to have “deliberately skipped” the Biodiversity and

Climate Protection session of the Summit. This development which points to the unrepentant stance of

the U.S. president against the 2015 Paris Accord on Climate Change Mitigation (on the basis that the

resolution in the accord will hinder manufacturing growth in the U.S.) implies that less progress is likely

to be achieve in the drive to mitigate the rising global warming condition.

Consequently, the outcome of this year G7 Summit deviated from the previous trends as the end of

the Summit’s communique only contain unanimous resolution on five of the many subjects discussed

throughout the sessions. With the U.S. president now set to host the 2020 edition of the G7 Summit,

we are of the view that more ripples are likely to be generated on trade issues in the coming months

so long the U.S. president sticks to his current grounds.

DOMESTIC ECONOMY

Nigeria PMI extend expansion in the month of August

Nigeria Manufacturing PMI expanded to 57.9ps in August of 2019 from 57.6ps in the previous

month. The figure points to the second consecutive month of faster expansion in PMI following a

slowdown between May (57.8pts) and June (57.4pts). The expansion in the PMI is the fastest since

February, 2019, and could be attributed to increased inventory build-up by importers of certain

items that fell under the new CBN forex restriction policy.

On the flipside, weak expansion was recorded in Production Level (58.7ps from 58.9ps), New Orders

(57.1ps from 57.2ps), and Employment Level (57.1ps from 57.3ps). This we believe reflect the true

broader economic position, as consumers’ purchasing power (to demand for more items) did not

improve in the said month.

Though we anticipate PMI expansion to be sustain in the coming month, we believe the trend may weaken

slightly as the new CBN policy on forex restriction to importers of some selected items weigh on the

expansion capacity of the manufacturing & non-manufacturing sectors. However, we believe seasonality

effect ahead of the festive period will support positive PMI in the remaining months of the year.

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EQUITY MARKET

Market reversed previous week sentiment with a 1% w/w loss

The local bourse this week closed negative in three of the five trading sessions, as investors went

on profit taking in the aftermath of the 3.25% gain recorded in the previous. The selloff this week

was driven by profit taking on Seplat, Intbrew, Oando, Access, UBA, Dangcem and others.

Consequently, the overall market performance indices, NSE-ASI and Market Capitalization values

compressed by 0.99% w/w to close at 27,525.81 absolute points and ₦13.39 trillion respectively,

as against 27,800.17 absolute points and ₦13.52 trillion last week.

Of the five major sectors, three closed negatives on week-on-week valuation, led by Oil & Gas (-

10.76%), Banking (-3.46%), and Consumer goods (-0.63%), while Insurance and Industrial goods

sectors closed positive with gains of 1.15% and 0.34% respectively.

JOHNHOLT emerged top advancer this week, appreciating by 19.57% w/w, while SEPLAT led

the decliners’ park with a loss of 18.84% w/w.

Overall, a total turnover of 713.14 million shares worth ₦13.29 billion in 16,244 deals were

traded this week by investors on the floor of the Nigerian exchange in contrast to a total 2.34

billion shares valued at ₦15.79 billion that exchanged hands last week in 18,379 deals. A total

of twenty-five (25) equities appreciated in price this week, lower than forty (40) in the previous

week. Thirty-five (35) equities depreciated in price this week, higher than twenty-five (25) equities

in the preceding week, while a Hundred and nine (109) equities remained unchanged, higher than

a Hundred and one (101) equities recorded in the preceding week.

Market Outlook: Week ending September 6, 2019

Given the current lack of sustaining catalyst in the market, we anticipate continued profit taking in the

next trading week

FX, EXTERNAL RESERVE & CRUDE OIL MARKET

The Naira this week weakened against the USD at the Inter-bank, but strengthened against the

greenback at the I&E window. At the Inter-bank market, the Naira this week closed against the

USD at ₦307/$1 as against ₦306.95/$1 last week, while the pair gained 0.06% at the I&E

window to close at ₦362.93/$1 as against ₦363.14/$1 last week.

On the other hand, the Nigeria foreign reserves balance fell by $340 million w/w to close for this

week at $43.67 billion, while Brent benchmark crude oil price climbed slightly by $0.28 per barrel

to close for this week at $58.92 per barrel as against $58.64 per barrel last week Friday.

/

Source: NSE, GTI Research

Source: GTI Research

Source: FMDQ, CBN, Oilprice.com, GTI Research

₦0.46 ₦1.30 ₦0.63 ₦0.20

₦35.00

₦0.55 ₦1.45 ₦0.70 ₦0.22

₦38.00

19.57% 11.54% 11.11%10.00%

8.57%

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Best Performing Stocks For The Week

Week Opening Price Week Closing Price % Change

₦490.00

₦1.07 ₦11.50 ₦8.30 ₦1.55

₦397.70

₦0.88 ₦9.75 ₦7.20 ₦1.37

-18.84% -17.76% -15.22% -13.25% -11.61%-100

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1000Worst Performing Stocks For The Week

Week Opening Price Week Closing Price % Change

GTI Equity Watch List

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DISCLOSURE

Conflict of Interest

GTI Securities Ltd and its sister companies within the GTI Group may execute transactions in securities of companies mentioned in this document

and may also perform or seek to perform investment banking services for those companies mentioned herein. Trading desks may trade, or have

traded, as principal on the basis of the research analyst(s) views and report(s).

Analyst Certification

Where applicable, the views expressed in this report accurately reflect the analysts' views about any and all of the investments or issuers to

which the report relates, and no part of the analysts' compensation was, is, or will be, directly or indirectly, related to the specific

recommendations, views or corporate finance transactions expressed in the report.

Disclaimer

This report by GTI Securities Ltd is for information purposes only. While opinions and estimates therein have been carefully prepared, the

company and its employees do not guaranty the complete accuracy of the information contained herewith as information was also gathered

from various sources believed to be reliable and accurate at the time of this report. We do not take responsibility therefore for any loss arising

from the use of the information.

For enquires/research queries, please send an email to research@gti.com.ng

Analyst

Asimiyu Damilare – 0806 072 2944

Baanu Olaide – 0810 377 4799