Resilient stocks gain amidst market crisis

Some quoted equities at the Nigerian Stock Exchange have remained resilient, this year, in spite of the crunch in the capital market that sent stocks’ prices below their listed values.

Many of these stocks are in eight out of the 30 sectors listed at the Exchange. They range from banking, breweries, building material, conglomerates, food/beverages, to health-care.

These stocks were worst hit when the global economic downturn began mid last year and thus ensured that 2009 began on a bearish note.

As at the close of trading on Friday, available data from the Exchange shows that majority of these stocks have now almost doubled in value when compared with their prices during the first month of the year.

Bank stocks

Regardless of the crisis which rocked the banking sector recently, about seven equities in the sector have consistently recorded price appreciation. In the last 10 months of the year, Access Bank has gained over 68 per cent on its share price, Diamond Bank’s share was up by 92 per cent, while First City Monument Bank and Guaranty Trust Bank have gained 53 and 97 per cent respectively.

Analysts say stocks become resilient to negative market trend when investor’s confidence in those stocks did not diminish.

Olugbenga Emmanuel, a stock analyst and a chartered accountant, said, “No matter the crisis in the capital market, some investors will still put their money there simply because that is their territory; the major market they know.”

He said the only difference is that “they (investors) will only invest in shares they have tested over the years, that is, stocks that have passed through the test of time.”

Good products

Guinness Nigeria Plc and Nigerian Breweries Plc, were the only companies out of the seven whose share prices gained in the breweries sector during the period under review, recording 96 and 84 per cent increase, respectively.

Equities in the building sector recorded the highest gains; four out of seven listed stocks in the sector appreciated in value. The share prices of Ashaka Cement, Benue Cement Company, Cement Company of Northern Nigeria, and Lafarge Wapco Cement, which closed in January at N9.78, N17.96, N5.96, N13.55 respectively, are by last Friday, worth N13.60, N42.50, N12.97, N28.55.

Virginus Agada, a Stockbroker at Eurocomm Securities Limited, said he was not surprised that equities in the breweries, building, and the conglomerate sectors have remained strong in spite of the capital market troubles. “Investor’s confidences in these stocks have remained strong because they (investors) believe in the companies’ management and the products or services they offer,” he added.

Meanwhile, three of the eight conglomerate stocks have consistently added value on their shares. PZ Cussons Nigeria Plc, UAC Nigeria Plc, and Unilever Nigeria Plc, which closed in January at N11.00, N26.18, N5.90, were by Friday valued at N22.52, N41.96, N19.38 respectively.

In the past 10 months, only three of the 16 listed stocks in the food/beverages sector gained. They are Dangote Sugar Refinery which recorded 53 per cent, Flour Mills Nigeria which had 101 per cent, and Nestle Nigeria which recorded 67 per cent.