After ending the year 2020 with a record 50 percent gain, the Nigerian stock market has been unable to sustain the momentum in the first half of 2021 as investors’ appetite for stocks continues to wane on rising yields.
Compared with peers, Nigerian stocks have underperformed with a YTD (year-to date) performance of -5.9 percent as against Ghana, Kenya and South Africa whose stocks were up 36.3 percent, 14 percent and 11.53 percent, respectively, in the first half of the year.
Yinka Ademuwagun, investment management analyst at ValuAlliance, explains that unlike last year when interest rates were low and investors had to troop into the stock market, they have moved out this year as interest rates continue to rise.
Despite the inflation rate that has slowed for the second successive month in May and oil price that touched its highest since 2018 at $76, it has been unable to spur investor’s appetite for Nigerian equities as they are more interested in the fixed income space.
However, while some companies have seen their share plunge significantly in the first half, some shares have rewarded investors with eye-popping gains.
Here are the best performing stocks in the first half of 2021:
LASACO Assurance
LASACO’s share price is the best performer as it stormed 329 percent higher in the first half of 2021 (H1 2021). The insurance and financial service company opened the year with a share price of N0.35 and rose to N1.50 as at June 3oth 2021.
Morison Industries
Morison’s share price came next with a 186 percent gain in H1 2021. Morison began the year with a share price of N0.49 per share and closed its last trading day in June at N1.40 per share, ranking it second-best on the Nigerian exchange group in year-to-date performance.
Morison Industries plc specialises in manufacturing and marketing pharmaceutical, hygiene and care products.
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Champion Breweries
The Champion breweries share price came next with 144 percent gain. The beer maker’s share opened the year at N0.86 and jumped to N2.1 as at June 30th 2021.
Since Heineken’s indirect acquisition of additional shares in Champion Breweries through Raysun Nigeria Limited on the 8th of January 2021, buying interest by investors have continued to prop the shares of the company.
Royal Exchange
The share price of Royal Exchange, one of Nigeria’s foremost financial services groups offering general and health insurance, also gained by 135 percent in H1 2021. The insurer’s share price began the year at N0.26 and has surged to N0.61 in the review period.
Regency Alliance Insurance
Regency Alliance ranked the fifth best performer in H1 2021 with 109 percent gain. The insurance company began the year with a share price of N0.22 and surged to N0.46 per share on the last day of June 2021.
Vitafoam
Vitafoam’s share price recorded a 97 percent gain in the first half of the year. The manufacturer of foam products saw its share price rise to N15.4 per share compared to N7.8 per share at the beginning of the year.
Consolidated Hallmark
Consolidated Hallmark Insurance’s share price also gained 88 percent in the first half of 2021. The insurer’s share price opened the year at N0.32, surging to N0.60 as of 30 June 2021.
Seplat
Seplat shares have gained 72 percent, ranking it 8th among the top performers in terms of year-to-date performance.
As oil prices continue to rebound, investor’s buying interest resumed and this pushed Seplat’s shares up to N690 per share as at June 30th 2021 from an opening price of N402 per share.
Linkage Assurance
LINKASSURE began the year with a share price of N0.52 and has since gained 61.54 percent on that price valuation, ranking it 9th on the NSE in terms of year-to-date performance. This stock gained 40 percent in the last one month alone
Mutual Benefits Assurance
MBenefit ranked the 10th on the NSE in terms of year-to-date performance with 59.26 percent gain. The insurance company began the year with a share price of N0.27 and surged to N0.43 per share as at June 30th 2021.
Other stocks that outperformed the NSE year-to-date return
While some stocks did not make the top 10 list, they have outperformed the NSE year-to-date return -5.9 percent. These stocks include McNichols (56.86%), Guinness (52.63%), Eterna (47%), WAPIC (42.5%) and Honeywell Flour Mill (39.17%).
Outlook for H2
On the outlook for the second half of the year, investment analysts have projected that investors might flock back if companies post impressive half-year performance and for dividend benefits.
“The outlook for equities in the second half is not very positive, the only catalyst for a slight rebound might be positive earnings by companies which could stimulate investors interest,” an equity analyst who prefers anonymity says.
Analysts at Cordros Capital, a Lagos-based investment house, have also projected that investors might flock back to reap dividend benefits.
“Despite the yield retracement in the fixed income market, we do not think investors should give up on the possibility of a market rally in the second half of the year as we still see scope for positive market performance.
“Given that the second half of the year is associated with the declaration of interim dividends, we envisage that investors will flock into stocks with attractive dividend yields as we inch closer to the half-year earnings season,” they note.
