These stocks are Nigeria’s top underperformers

Many investors who chose to hold some stocks till date, particularly for capital gains, are no doubt nursing their sores occasioned by the bear reign this February which has pushed prices of many value counters to new lows.

Topmost on the list of underperformers is Transcorp Hotel Plc which has lost 33.7percent of its year-open price. It’s followed by FTN Cocoa (-24.2percent), Oando Plc (-16.8percent), DAAR Communications (-16.7percent), Dangote Cement Plc (-10.2percent), Sunu Assurance (-10percent), and Beta Glass (-9.7percent).

“The equities market is experiencing continued bearish momentum. It appears that investors are reacting to the uptrend in market interest rates which is beginning to make money market instruments attractive again”, said Coronation research analysts in their February 15 note.

Other top underperforming stocks are: Conoil (-9.4percent), Sterling Bank (-8.8percent), Ecobank Transnational Incorporated (-8.3percent), ABC Transport (-7.9percent), BUA Cement (-6.9percent), Cadbury (-5.6percent), and Chemical & Allied Products (-5percent). Other major laggards as shown in their value decline this year include NAHCO (-6.5percent) and GTBank (-4.5percent).

Stock market is in red because the persistent rise in yields of short-dated instruments in the Fixed Income (FI) market makes many fund managers move funds out of stocks, which threatens equities performance in the short-term.

Read Also: Kagara abduction: Senate calls for state of emergency on insecurity

Our trend watch shows the stock market of Africa’s largest economy had opened the year 2021 with All Share Index (ASI) at a record high of 40,270.72 points but it decreased to 40,212.19 points as at the close of trading on Thursday February 18 while listed stocks’ value decreased from year-open high of N21.057 trillion to N21.036trillion. February losses have erased the gains recorded in the month of January, putting the market in the negative region.

This disappointing development comes on the heels of FBNQuest research analysts projecting another positive year for equities in 2021.

The research team while noting that lower yields and the elevated liquidity available to domestic institutions had buoyed stocks in 2020, noted further that domestic institutions are swayed by dividend yield offered by bank stocks. “A number of non-financial stocks such as Seplat, Flour Mills, Nestle Nigeria and UAC of Nigeria are also expected to outperform in 2021”, FBNQuest research said.

FCMB has also lost 3.9percent of its year-open price, followed by Royal Exchange (-3.8percent), GSK (-3.6percent), Nestle (-3.7percent), Union Bank (-3.7percent), UBA (-2.9percent), Fidelity Bank (-2.8percent), Cutix (-2.6percent), MRS (-2.5percent), Stanbic (-2.4percent), Caverton (-2.4percent), Neimeth (-2.2percent), C& I Leasing (-1.3percent), Custodian Investment (-1.7percent), and Red Star (-1.7percent).

“Given the latest report from the National Bureau of Statistics (NBS), where the country exited recession after GDP advanced by 0.11percent year-on-year (y/y) in fourth quarter (Q4) 2020, we expect a bit of cherry picking activities in some fundamentally sound stocks with low valuations. However, the persistent rise in yields of short-dated instruments in the Fixed Income market will continue to pose a threat in the short term”, Vetiva research analysts said on Thursday February 18.

In the absence of any significant positive catalyst capable of lifting investors’ confidence, the bearish performance seen lately in the stock market will filter into next trading sessions.

Numerous negative closes seen in February has led to the market dipping by -5.19percent month-to-date (MtD). The market’s year-to-date (YtD) printed negative at 0.15 percent on Thursday February 18.