Insurance stocks top Lagos Bourse laggards list

At the Lagos Bourse, investors who took positions in some insurance companies, particularly the penny stocks have seen the value of their shares deplete remarkably this year, recording value loss in excess of 40percent year-to-date (ytd).

The price list of stocks listed on the Nigerian Stock Exchange (NSE) shows Cornerstone Insurance Plc closed at 23kobo as at Friday August 24, 2018, representing 54percent decline this year; Sovereign Trust Insurance Plc at 25kobo per share has lost 50percent of its value; while Sunu Assurances Nigeria Plc at 20kobo per share has lost 60percent of its value this year.

These and other insurance stocks became worse-off after the Nigerian Stock Exchange (NSE) on January 28, 2018 implemented the rules on par value and share price methodology.

Analysts had expected the policy to result in sharp depreciation of up to 37 listed securities which has not trade above 50kobo for a long time, especially insurance companies. Insurance subsector had warehoused many 50kobo stocks when the price floor for listed companies was 50kobo, but with the implementation of the Par Value Rule in January the price floor became one kobo.

Since the new pricing methodology and per value, the price of every share listed on the Exchange is now determined by the market, except that no share trades below a price floor of one kobo.

Regency Alliance Plc at 22kobo has lost 56percent of its share price at the beginning of this year; Royal Exchange Insurance Plc at 22kobo is down by 50percent; Union Dicon Salt Plc at 26kobo has declined this year by 48percent; Veritas Kapital Assurance Plc (28kobo) has declined by 44percent; while Lafarge Africa Plc at N26.25 is down this year by 41.5percent.

Other stocks that recorded over 40 percent price decline this year include Forte Oil Plc which closed at N23, after losing 47.1 percent of its year-on price; Japaul Oil Plc has also lost 48percent of its year-open share as it closed last Friday at 26kobo; Tantalizers Plc at 21kobo has lost 58percent of its value this year; while Thomas Wyatt Nigeria Plc at 26kobo per share has lost 48percent of its year-open price.

Also, Consolidated Hallmark Insurance Plc at 29kobo has lost 42percent of its share price this year; International Breweries Plc at N32 has lost 41.3percent of its year-open value; Mutual Benefits Assurance Plc at 29kobo has lost 42percent of its value this year;

The value of listed Nigerian stocks at N12.933 trillion and the All Share Index (ASI) at 35,426.17 points as at the close of trading last week implies a negative return of 7.37percent for Custom Street stock traders. The value of listed Nigerian equities had opened the year 2018 at N13.609trillion. Stock investors who held their equities till date have lost about N676 billion.

“The Nigerian equities market pared its gains from early 2018, reeling from profit-taking and interest rate hikes in the US. Recent developments in the political space bespeak uncertainty and this has cast a shadow on the overall mood in the equities market,” according to Omonegho Imoagene-led team of research analysts at Lagos-based CardinalStone.

Currently, some other analysts maintain their bearish case scenario for the Nigerian Bourse, on the assumption that uncertainties surrounding the build-up to the 2019 election and dynamics in the global space may be overwhelming.