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2012 Sectoral Performance Analysis

2012: Year of Strong Reversal, as Investor Confidence Improves


Tuesday, 08 January 2013/ The Analyst, Proshare

Nigerian key benchmark indices witnessed an improved performance in the year 2012 returning its best returns in five years on the back of a strong and significant trend reversal that erased the previous year loss completely to set a new high in 34mths; with a 7000 basis points boost to settle 2012 at 28,078.81. A full year review of our weekly market sentiments reports (http://www.proshareng.com/news/Cap%20Mkt%20Sentiments) reveals that confidence as a measure of direct and quantitatively assessed changes in investor holdings of equities improved significantly, albeit; in relation to the profile of the new market that it created 70% foreign investors and 30% domestic investors (with the retail market fairly nonexistent and reflecting an overhang in the post-crisis management).

The ASI experienced unstable trends along the way with a series of swings to record +4.19% gain in the first-half of year on the back of low-key bargain trend and lacklustre trading as investors remained wary; with an increased number of sideline attendants due to the absence of a clear horizon as regards to outstanding issues related to liquidity, debt-overhang and a number of unending probes and intrusions into the regulatory and operational structure of the market in a chaotic rush to find answers for the continued slide.

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2012 Sectoral Performance Analysis

The second half of the year witnessed increased institutional patronage as a confluence of global and local economic, fiscal and monetary policies ensured that the horizon for the Nigerian bourse wore a promising look the attendant optimism surged consistently with a welcome uptick in Q3 2012, still on the back of continued institutional buying (as revealed by the volume/house analysis). Further, the period witnessed significant shift from the bond market into equity market, as yields dropped, boosting value and volume turnover significantly.

H2 2012 was a pivotal turning point for the market- this cannot be isolated from initiatives, pronouncements and actions taken by the management of NSE to reflate the market, some of which had been in the works for a while. As the positive news cycle built up, market sentiments (foreign and institutional investors confidence primarily) and returns recorded in Q3 and Q4 2012 helped to sustain the rally. Some timely and needs-based regulatory actions overlapped with a growing emphasis on compliance monitoring and reporting in the market aided the reversal and start-off phase of the recovery as documented here. http://proshareng.com/news/19016

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2012 Sectoral Performance Analysis

Metamorphosis of Renewed Market confidence Periods Q1'12 Q2'12 Q3'12 Q4'12


Proshare Research

Market Indicator -0.38% 4.59% 20.43% 7.95%

Remarks Poor start as market confidence remained feeble while investors appeared wary Improved market confidence observed but still weak as remained cautious Market confidence returned significantly with impressive rally & Accumulation, though anticipatory influence impacted the rally Market confidence and optimism remained firm despite increased pessimistic trading during sell-off season

Q3 and Q4 2012 thus witnessed increased market optimism along with gradual growth of value-value investing as most of the side-line attendants turned active, consequently increasing the accumulation pattern in the market with increased Naira votes, signifying renewed commitment and positive sentiments (if not entirely a confidence trigger).

That being said, anticipatory and cautious trading (value-for-money-approach) dominated market atmosphere as most active and value stocks recorded improved prospects as regards to growing earnings with an increased chance of delivering beyond the expectation a reflection of the cheap valuation posture of the market. In 2012, it was observed that the key benchmark indices received more boost and support from the Agriculture and Consumer Goods stocks as these class of equities became the investors toast during the year led by activities in Presco, Livestock, Cadbury & International Breweries, movers of market turnover volume with impressive institutional patronage. 2012: Market Performance by Sector Average Sectors Contributors Gains Agriculture Presco, LIVESTOCK 54.41% Consumer Goods Industrial Goods Conglomerates 20.56% 15.67% 10.58% INTBREW, CADBURY PAINTCOM, CAP TRANSCORP, UACN

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2012 Sectoral Performance Analysis

Financial Services Healthcare ICT Services Construction/Real Estate Natural Resources Oil & Gas
NSE/Proshare Research

10.33% 2.82% 0.02% -0.39% -0.72% -2.64% -33.78%

DIAMONDBNK, ACCESS GLAXOSMITH, EVANSMED NCR LEARNAFRCA ARBICO BOCGAS, ALEX FO, MRS

Additional Resource:
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Which Sectors Made you Money in 2012? Stocks Hitting 52wk High & Low @ Dec 2012 66 Stocks on the Caution List for 2013 2013 Investors Guide As Sentiments Appear Bullish Nigerian Bourse Remains a Leading Frontier Market in 2012 Regulatory Actions in 2012 and the Impact on ASI List of Nigerian Quoted Companies by Turnover for period ended Third Quarter of 2012 Cash-flow Challenges Cast Dark Cloud Over Oil & Gas Stocks as Sector Bleeds Sentiment Analysis Report - W/E January 04, 2013 Sentiment Analysis Report W/E December 28, 2012 Relatively benign food price gains ease inflation outlook

About the Authors:


Taiwo OLOGBON-ORI, Reshu BAGGA and Olufemi AWOYEMI, FCA.

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Tags: Investor Confidence, Market Sentiments, Foreign Investors, Domestic Investors, Institutional Investors, Market Makers, Retail Investors, Shareholders, Regulatory Action, Trend Reversal, Trading, Value for Money, Value for Value, Sectoral analysis, NSE Index, All Share Index, NSE, Basis Points, Reversal, Recovery

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