Culled—Proshare
April 9, 2018/Afrinvest Research
Market Last Week (Our Observation)
• The local equities market in the previous week extended the 3-week consecutive downtrend as the All Share Index declined 1.6% W-o-W to 40,841.14 points while YTD returns moderated to 6.8%.
• Performance across sectors was bearish as all indices we track closed in the red. The Oil & Gas index declined the most – down 2.8%- while the Industrial Goods and Banking indices shed 2.1% and 1.1% respectively. Similarly, the Consumer Goods and the Insurance indices also fell 1.1% and 0.1% respectively.
• The best performers for the week were LASACO (+21.2%), MAYBAKER (+14.3%) and LAWUNION (+12.3%) while the underperforming stocks were JAPAUL OIL (-23.7%), UNITYBANK (-17.2%) and GLAXOSMITH (-14.7%).
Market This Week (Our expectations)
• The Afrinvest weekly sentiment indicator advanced to 0.8x from 0.6x points the previous week due to increased activity in the local bourse.
• We believe the current negative performance of the market is a correction to the bullish run witnessed in the first two months of the year. The weak sentiment also reflects some negative earnings surprises in the earnings season as well as slowdown in portfolio flows into the equity market.
• The extended selloff has, however, created attractive entry opportunities in large and medium cap stocks with strong fundamentals. We therefore maintain our positive near term outlook as investors hunt for bargain opportunities.
