The Nigerian Equity Market (“the Market”) ended 2021 in the positive; the first sequential positive performance since 2013, with a Year-to-Date (“YTD”) return of 6.07% compared to the 2020 YTD return of 50.03%. The 2020 remarkable performance of the Market was significantly driven by the positive performance of Dangote Cement (DANGCEM), with a YTD return of 72.46% given it is the most capitalized stock in the Market, therefore, contributing a whole lot to the Market’s performance. However, in 2021, DANGCEM had a YTD return of 5% which we believe couldn’t have been a major contributor to the Market’s performance. So which stock(s) drove the Market’s performance in 2021? To understand the nuances, there is a need to clearly state that the top 5 most capitalized stocks in the Market (The Influencers) represent c.70% of the whole Market while the next 1o most capitalized stocks (The Significant Ones); in addition to the top 5, represent c. 90% of the whole Market. Hence, the individual performances of these top 15 most capitalized stocks have an impact on the performance of the Market.
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Performances of the Top 15 Stocks in 2021 Based on YTD Return.
| S/N | Stock | Market Value as at 31 Dec 2020 |
Market Value as at 31 Dec 2021 |
YTD Return |
| 1 | Dangote Cement | 244.90 | 257.00 | 4.94% |
| 2 | MTN Nigeria | 169.90 | 197.00 | 15.95% |
| 3 | Airtel Africa | 851.80 | 955.00 | 12.12% |
| 4 | BUA Cement | 77.35 | 67.05 | -13.32% |
| 5 | Nestle Nigeria | 1,505.00 | 1,556.50 | 3.42% |
| 6 | Zenith Bank | 24.80 | 25.15 | 1.41% |
| 7 | Guaranty Trust Holding Company | 32.35 | 26.00 | -19.63% |
| 8 | Stanbic IBTC Bank | 37.76 | 36.00 | -4.66% |
| 9 | FBN Holdings | 7.15 | 11.40 | 59.44% |
| 10 | Nigerian Breweries | 56.00 | 50.00 | -10.71% |
| 11 | Lafarge Africa | 21.05 | 23.95 | 13.78% |
| 12 | Seplat Petroleum Development Company | 402.30 | 650.00 | 61.57% |
| 13 | Access Bank | 8.45 | 9.30 | 10.06% |
| 14 | United Bank for Africa | 8.65 | 8.05 | -6.94% |
| 15 | Ecobank Transnational Incorporated | 6.00 | 8.70 | 45.00% |
| NGX ASI Return | 50.03% | 6.07% |
From the above, the top 3 performers in 2021 from the Top 15 most capitalized stocks were First Bank Nigeria Holdings (FBNH), Seplat Energy (SEPLAT) and Ecobank Transnational Int. (ETI). This evidences that the Market reacted positively to the increases in Crude Oil prices in 2021; the shareholdings shake-up that occurred in FBNH and the reemergence of ETI’s stronghold in Sub-Saharan Africa (SSA).
However, a further review revealed that the performance of the Market was really driven by the positive performances of MTN Nigeria (MTNN) and Airtel Africa (AIRTELAFRI) based on their sizes and YTD returns (members of the Influencers). Please see the table above. Whilst the performances of these stocks were driven by the market’s reaction to the announcement of the Central Bank of Nigeria’s (CBN) provisional approval of their PSB Licenses, AIRTELAFRI’s performance was in addition driven by the demand for the stock due to its dual listing. Big thanks to the Telcos, we must say.
Consequently, we expect a repeat in the performance of the Market if the PSB Licenses eventually gets approved by the CBN. However, would this happen in 2022? Only time will tell.
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