Only These 3 stocks have outperformed bonds in the last 4 years

The last five years has been bad for the Nigerian economy but things have been even worse for 99% of Nigerian equity investors as only 3 stocks managed to outperform the 5 Year FGN Bond since 2015.

Businessday analysis of capital gains on 91 most liquid stocks on the Nigerian Stock exchange show that

only three stocks have earned more in capital gains than the compounded return on the 5-year government bond based on its bond yield in May, 2015.

Dangote Flour, NEM and Okomu Oil were the only three stocks to have outperformed the compounded riskfree yield on the 5-year bond of 15.54 percent in 2015 returning 346.25 percent, 153.66 percent and 93.68 percent respectively.

C&I leasing which had earned the highest return of 550 percent largely

Businessday MARKETS INTELLIGENCE

(Team lead: BALA AUGIE due to a reverse stock split which cannot be considered as capital gains as it did not translate to actual cash for investors.

A combination of weak corporate earnings growth and erosion of investors confidence which was precipitated by a slowdown in economic growth since 2015 has cost investors trillions in the Nigerian stock market as the index declined 18% since May 29, 2015 and 37% lower than its level in January 15, 2018.

“Good governance helps build investor confidence and even though a good number of Nigerian companies are performing better than they were 5 years ago, the market selloff may likely continue until the outlook on the economy improves. Implementation of policies that would take the economy to pre-2015 growth levels is what investors are waiting to see.” Obinna Uzoma, a Lagos-based economist explained.

The market closed at 27,918.59 on Friday 26th July, returning -11.17 percent since January 1, 2019.

- Analyst: DIPO OLADEHINDE, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: FIFEN FAMOUS)