The Nigeria Stock Exchange (NSE) insurance index increased by 7 percent in the first half (H1) of 2018 making it the best performing index on the bourse for the period according to the data compiled from Bloomberg. The insurance index also outperformed general market performance as the market maintains a bearish state despite a 4 percent growth in the All Share Index (ASI) in H1 2018.
BusinessDay analysis shows that on a year to date YTD basis, the insurance index grew from 140.66 index points to 150.44 index points amongst other sectoral index on the Nigerian Stock Exchange (NSE) despite the overall bearish state of the stock market in H1 2018.
Speaking about the insurance index, Dolapo Ashiru an investment analyst opines that “regulations soon to be passed which would put insurance companies into tiers has made the index see a rally in anticipation of consolidations among these companies.”
Amongsts companies listed in the insurance index, YTD company performance reveals that companies such as AXA Mansard Insurance Plc, Custodian and Allied Insurance and NEM insurance were the main market movers. Topping the chart was AXA Mansard with 13.1432 index points, Custodian with 11.86 index points and NEM with 11.08 index points.
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Other index such as the industrial index and the banking index have shown resilience with more opportunities expected during the second half of the year, providing both domestic and foreign investors the opportunity to reconsider their investment options and rebalance their portfolios.
YTD performance reveals that the industrial index appreciated by 1.48 percent from 1979.4 points in January to 2008.7 as at end of June making the index the second best performer on the NSE. The banking index also struggled to witness an appreciation of 0.17 percent in its H1 performance from 475.26bps to 476.05bps.
Abdulrauf Bello, Investment Research Analyst, WSTC Financial Services opines that, “i expect an uptick in banking index as whatever liquidity that would be released into the economy will go through the banking sector”
The consumer index and the oil and gas index on the other hand stood as the worst performing indexes on the Nigeria Stock Exchange Market. The consumer Index declined by 5.21 percent from 978.67bps to 927.72bps as at June 2018. The oil and gas index performance dropped by 1.89 percent from 329.43bps to 323.22bps within the same period under review.
Paul Uzum, stockbroker at the Nigerian Stock exchange market believes that despite the bearish state of the market, the oil and gas index should pick up in the second half of 2018 as a result of the soon to be completed oil subsidy payment moves by the federal government of Nigeria to oil companies. Likely increase in pump prices will also benefit these companies and improve their financials thereby making investments in these companies looking good for investors.
Going forward, investors in Nigeria will be looking to increase their exposure to sectors in the economy that offer the most money-spinning rewards, whereas current investments made in under-performing sectors in the first half of 2018 will be dropped. This strategy is widely recognised as sector rotation.
