Dec 30 (Lagos) - As 2016 comes to an end, it is time to reflect on the difficult period that it brought upon the stock market investors in Nigeria. The foreign exchange woes of the Nigerian economy dealt blows to the All Stock Index of the Nigerian Stock Market throughout 2016.
Many times in 2016 we wondered when the CBN will put those Policies in place that help check the Naira rout. They excited everybody with the announcement of the flexible exchange rate Policy but it failed to check the Naira erosion with many analysts questioning of the currency was truly floated.
So call it devaluation or depreciation, the Naira's decline pushed the Nigerian economy in to a recession with inflation close to 19% towards the end of the year.
Still were Companies that performed wonderfully during 2016 and were rewarded by the stock market. Recession meant little to these Companies. Let us take a look at the top 5 stocks of 2016.
1) UNITED CAPITAL Plc ( UCAP ) - The investment banking arm of UBA
Group. With rising interest rates and steepening yield curve, this Company posted results that excited investors who bought the stock and sent it up 108% in 2016.
Nigeria Plc ( TOTAL
) - This Oil and Gas Company attracted investors as a result of deregulation in the Petroleum sector and gained by 103%. This was expected and was called by many analysts who send their opinions to Easykobo. No surprise here.
Petroleum Plc ( SEPLAT
) - The Company recovered its losses in the second half of the year as the crude oil prices started gaining. It must be mentioned that this Oil & Gas Company went public in May 2014 through an IPO. The stock now trades sharply below its IPO price and investors in this stock should be happy to recover some of their losses.
ETF ( NEWGOLD
) - The fourth in this list is actually an electronic traded Fund which tracks the spot price of gold in South African Rand. This ETF gained as a result of rising gold prices and devaluation of the South African currency. This ETF gained a whopping 86% in 2016.
5) Mobil Nigeria Plc ( MOBIL
) - The stock is up 80% for the year but no surprises here as many analysts who send their opinions to Easykobo expected this as a result of deregulation in the Oil and Gas sector. This Company is also going through an acquisition by Nipco Nigeria Ltd. ExxonMobil is selling its stake in MOBIL
to NIPCO and the agreed transfer price is said to be above N 400 per stock. With the stock currently trading at 279, this space must be followed in 2017.
As we can see above that 3 out of 5 best stocks of 2016 came from the oil and gas sector. However the deregulation was not good for many stocks as we can see from the following list of 5 worst stocks of 2016 by percentage decline in prices.
1) Forte Oil Plc ( FO
) - The deregulation did not go well for this Oil and Gas stock as it lost almost 75% of its market value during the year. Some would say the stock was overvalued in the first place with astonishing gains it made during the 2012-2014 period.
2) Skye Bank Plc ( SKYEBANK
) - The bank was raided by EFCC during the year and its stock price collapsed by 68% since then. Many analysts wonder about the future of the bank but CBN came out and said that no bank in Nigeria is distressed which helped stop the free fall in banking stocks.
3) CAVERTON - Another May 2014 IPO that destroyed investors wealth. IPO opened at N 7.02 per unit and now the stock trades at 90 kobo per unit.
4) Diamond Bank Plc ( DIAMONDBNK
) - Another bank that reported lower numbers during the year and was punished by the market. There is other banks in this list that lost just a little bit less than Diamond to miss being mentioned in this list like UNITYBNK
5) Insurance stocks in general were disappointing in 2016. This is strange as rising interest rates and bond yields will push up investment incomes at Insurance Companies. It was a great year for Insurance stock NEM
but it rose in low volumes. On the other hand 2016 was quite bad for Insurance Company stocks such as AIICO
. We will be watching this space in 2017.
2017 will bring opportunities again as we feel the government will really start kicking on its development agenda. Rising crude oil prices could offer a pleasant surprise for the government which was seen its foreign reserve rise over the past month after a long time.
Let us pray that 2016 brings prosperity and wealth to all easykobo followers and investors in the Nigerian stock market.
reporting for easykobo.com on Friday, Dec 30 2016 from Lagos, Nigeria