FY-17 Earnings: So Far, So Good?

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As the deadline for regulatory filing of FY-17 earnings fast approaches, we note that overall market performance as indicated by the NSEASI has continued to trend southwards despite decent earnings declarations by companies. Specifically, bellwether counters like GUARANTY (-2.7%), NESTLE (-4.4%), DANGCEM (-3.8%), NB (-2.5%) have all seen lackluster market reactions from the dates the companies filed their earnings and close of business yesterday. Consequently, YTD return has moderated from 16.0% as at 31st January 2018 to 7.8% as at 26th March 2018.

The reasons are not far-fetched; the earnings declaration session fell at a time when the market was experiencing correction from the January 2018 rally when the ASI emerged as one of the best-performing markets globally. In fact, 9M-17 earnings already gave a good indication of the magnitude of full-year earnings declaration and investors appeared to have priced this into their buying decisions early in the year. In effect, FY-17 earnings declarations were not sufficient to drive the market back to the green region. The lack of clarity in the fiscal and monetary policy directions further weighed on market sentiments despite the continued deceleration in the interest rate.

As the market lingers in the oversold region, we expect investors to seek bargains in the short term, before the onset of volatility that trails pre-election jitters later in the year.

 

UNITED CAPITAL NIGERIA

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