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Nigerian Stocks close 2021 with 6.07% gain

The Nigerian Stock Exchange All Share Index closed the year 2021 with a 6.07% gain. The All Share Index opened the year 2021 at 40,270.7 and closed with 42,716.4 points at the close of trading on December 31st, 2021, representing a 6.07% gain Year to Date.

Nigerian Stocks started 2021 on the back of an impressive 50.03% return as local investors staged a remarkable surge in demand for equities. However, stocks have struggled since 2021 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.

Just like in 2020, stocks were on a negative YTD return of -0.12% in September 2021 (-0.04% 2020) before posting gains in the last three months of the year. However, unlike in 2020 where stocks posted 13.79%, 14.72%, and 15.0 for the last three months of the year respectively, it did 4.52%, 2.88%, and -1.12% respectively in the corresponding period in 2021. Market breadth closed positive as NESTLE led 28 Gainers as against 14 Losers topped by NEM at the end of today’s session – an improved performance when compared with previous outlook.     

Market turnover closed positive as volume up by +24.89% as against +99.78% uptick recorded in the previous session. FBNH, ZENITHBANK and JAIZBANK were the most active to boost market turnover.  NESTLE  and ZENITHBANK topped market value list.

NESTLE leads the list of active stocks that recorded impressive volume spike at the end of today’s session.

Notable stats

  • Stocks closed the month of December with a negative 1.12% return. This is only the second time in 10 years that stocks have closed negatively in December, the other being 2019.
  • On a YTD basis, this is the first time since 2013 that stocks have closed the year back to back on a positive note. The last time this occurred was in 2012, 2013.
  • The best month for stocks in 2021 was in January when stocks returned 5.3%. This is followed by October where stocks returned 4.52%.
  • Stocks did not post double-digit returns for any month in 2021.
  • The month of March and June has been the worst months for stocks after posting negative returns for three consecutive years. The best month for stocks is September and November posting positive returns for three months consecutively.

Negative Real Return

  • With the inflation rate expected to close at around 15%, Nigerian stocks have returned -98.9% when adjusted for inflation.
  • This suggests the wider index has underperformed inflation thus, investors exposed to the wider index have posted losses.
  • Stocks are often judged for their inflation-adjusted returns and not just their gross returns.
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