Equities investors gain N1.24trn in 2021 despite low FPI

At the end of the year 2021, the Nigerian equities market appreciated by 6.07 per cent, despite the decline recorded in the Foreign Portfolio Investments (FPI), which has major impact on the market, among other catalysts.

The benchmark index of the Nigerian Exchange (NGX) Limited, the All-Share Index (ASI), at the close the year 2021 settled at 42,716.44 basis points from 40,270.72 basis points at which it opened trading for the year.

Thus, equities investors earned N1.240 trillion as the market capitalisation for the period settled at N22.297 trillion from N21.057 trillion it recorded at the beginning of the year despite that that the stock market struggled through the first half of the year as demand from local investors cooled amidst little to no interest from foreign investors, higher inflation, a shift in central bank monetary policies, and slow economic growth.

Performance across the major sectoral indices was also positive during the period with the NGX Oil & Gas index leading with 52.52 per cent gain. NGX Premium index followed with a gain of 20.08 per cent, while NGX Pension index up by 16.96 per cent.

NGX Lotus II, NGX 30, NGX Insurance, NGX Banking and NGX Consumer Goods indices closed the year in a positive territory with a gain of 5.74 per cent, 5.01 per cent, 4.54 per cent, 3.32 per cent and 2.78 per cent, respectively. On the other hand, NGX Industrial Goods index declined by 2.15 per cent in the period under review.

However, analyses indicated that total equities market transactions moderated in 2021 compared to the value of transactions executed in the corresponding period of 2020 as weak appetite of foreign portfolio investors (FPIs) amid fears of foreign exchange volatility eroded returns on investment.

At the local local bourse, local investors dominated the market as they accumulated more shares to take position in some fundamentally sound stocks following the release of corporates’ nine months financial results which were largely positive.

“The interest of the local institutional investors in the equities space picked in Q3, 2021 following the release of corporates’ nine months financial results which were largely positive, even as it further substantiated the capacity of the companies to sustain good dividend payouts in full year, 2021,” analysts at Cowry Assets noted.

Cordros Securities Limited, in its report titled ‘Nigeria in 2022: Traversing the Murky Recovery’ said: uptick in yields dampens bullish sentiments in the period under review.

According to the report, contrary to expectation that the bullish theme that pervaded the local bourse in H2-20 would extend into the first half of 2021, an upward retracement in FI yields derailed this despite the ASI gaining 5.3 per cent in January.

“However, buying interests driven by decent H1, 2021 corporate earnings and accompanying interim dividends positioning supported market performance in Q3, 2021 bolstered investors interest in dividend-paying stocks and leading the local bourse to close the year in the green territory.

An analysis of stocks performance at the NGX in the just concluded year indicated that Morison Industries earned the best performing stock in year 2021 as it’s price appreciated by 306.12 per cent to N1.99 from 49 kobo.
Royal Exchange came second on the board as it grew by 238.46 per cent to 88 kobo from 26 kobo, Lasaco Assurance followed with 200 per cent accrued increase to N1.05 from 35 kobo.

Also Vitafoam improved by 188.46 per cent to N22.50 from N7.80; Honeywell Flour jumped by 183.33 per cent to N3.40 from N1.20, while Champion Breweries chalked up 173.26 per cent to trade at N2.35 versus 86 kobo it closed 2020.

NEM Insurance gained 151.40 to sell for N4.50 in contrast to the preceding year’s N1.79, Consolidated Hallmark Insurance grew by 146.88 per cent to 79 kobo from 32 kobo, Regency Assurance appreciated by 131.82 per cent to 51 kobo from 22 kobo, while University Press rose by 129.69 per cent to N2.94 from N1.28.

Conversely, SCOA Nigeria’d stock depreciated the most as its value went shed 64.51 per cent to settle at N1.04 compared with the previous year’s N2.93.

CWG also dropped by 55.91 per cent to N1.12 from N2.54, Sunu Assuances depreciated by 55.00 per cent to trade at 45 kobo compared with its value in 2020 at N1.00, FTN Cocoa lost 40.91 per cent to sell for 39 kobo versus 66 kobo, while AIICO Insurance declined by 38.05 per cent to 70 kobo from N1.13.

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Equities investors gain N1.24trn in 2021 despite low FPI