Despite the prevailing economic downturn and the devastating effect of the COVD-19 crisis, 10 selected stocks were the best performing stocks on the floor of the Nigerian Stock Exchange in January.
These stocks include Champion Breweries (262 per cent), Livestock feeds (86 per cent), Linkage Assurance (73 per cent), B.O.C Gas (58 per cent), JapaulGold (47 per cent) and Lafarge Africa (43 per cent). Others include Ardova (40 per cent), Consolidated Hallmark Plc (38 per cent), Coronation Insurance (35 per cent) and Fidson (34 per cent). This means that the selected stocks gained 716 per cent in the month under review.
Daily Sun analysis showed that in terms of indices, the insurance sector led the way with a whopping return of about 29.77 per cent one of its best months in years. According to market analysts, the sector is in a recapitalization mood and so it was not surprising to see most insurance stocks gain impressively.
The NSE Oil and Gas index followed with a monthly gain of 12.43 per cent, while the NSE Banking index rose by 7.89 per cent in January.
Commenting on the performance of the stocks as well as the market, analysts said the low yield environment in the fixed income market was responsible for the boom in the market while adding that this is expected to continue in the short term going by the position of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) meeting.
The Chief Executive Officer, Investdata Consulting, Ambrose Omordion, said, the positive sentiments towards stocks in the month under review was fueled by anticipations of a bumper harvest in the 2020 full-year results following the improved Q3 numbers and unaudited full-year earnings released so far in the market.
Omordion added that with the positive breadth, there is the possibility of high dividend yields that will attract more inflows to the market. He however, warned that the market may experience some form of volatility in February even as global outlook remains mixed due to likely price corrections, or pullbacks for a few days due to profit-taking and portfolio reshuffling ahead of year-end and 2021 corporate actions.
For analysts at Nairametrics, the performance in the month under review suggests that the year has more chances of closing positively than negatively.
“As we have stated often on Nairametrics, the drive for the Nigerian Stock market performance this year will be the exchange rate, interest rates, and oil prices. Investors would be on the look-out for stocks with positive fundamentals such as banking stocks (FUGAZ), Caverton, Julius Berger, NASCON, Presco amongst others”, they said.