Your average return should be nearly two times the broad market gain in 2020 if you have invested exclusively and equally in these stocks: Dangote Cement, Access Bank, First Bank, UBA, Wapco, Zenith, and MTNthey are NSE’S premium stocks.
NSE premium stocks are up 18.39 percent as of Tuesday compared to the wider market’s 9.76 percent gain year-to-date.
The stock market is up almost double-digit in the year despite Tuesday’s profit-taking bring muchneeded relief to investors in the previously bearish market where the loss in 2019 narrowly missed 15 percent. The premium stocks are among NSE’S best performing in 2020.
So far, UBA has gained 23.78 percent, Zenith bank has surged 23.12, MTN has jumped 22.38 percent, First Bank has gained 21.95 percent, Dangote Cement has rallied 21.83 percent, Wapco has gained 10.13 while Access Bank has moved up by 6 percent. This leaves Seplat as the only premium stock with a sub-zero return.
Analysts say NSE’S rally has been on the back of early positioning in stocks that pay high dividend compared to their perunit price, and expectations ahead of the announcement of full-year results for 2019.
On the other hand, thinning yields in treasury bills with negative real return has forced big local investors to look elsewhere for gains.
National Pension Commission (Pencom) data as of 30 November shows an increase in equity exposure of local fund managers to 5.36 percent, up from 4.85 percent at the end of October.
Given that domestic equity exposure remains below levels before the start of NSE’S bearish run in 2018, analysts say the premium stocks are among the favourite for investors returning to the market.
However, the consensus is that fundamental issues that weighed on equities last year still abound and the direction of equities in 2020 would depend largely on the trajectory of the economy.
Read also: On the growth of consumer credit in the economy
In the year, Cornerstone stands out as NSE’S best performing with a return of 26.67 percent as of Tuesday.
Following closely, C&I Leasing has gained 24.58 percent while UACN, MTN and Ekocorp have surged 22.67 percent, 22.38 percent and 22.35 percent each.
On the other hand, NCR has lost 18.89 percent, Unilever is down 18.18 percent, Omatek has shed 18 percent while Fidson and Neimeth have lost 17.74 percent each.
Launched in 2015, the Premium Board features companies that meet the stock exchange’s most stringent listing criteria of capitalization, governance and liquidity.
Accordingly, the Premium Board Index serves as a benchmark for investors looking to track the performance of large firms with excellent corporate governance and sustainable business models.
