The Nigerian Exchange (NGX) All-Share Index has experienced a remarkable 262.3 per cent growth over the past five years, according to analysts at Coronation Research.
This impressive performance, spanning from January 1, 2020, to date, highlights a golden period for Nigerian equities, fueled by low market interest rates, earnings growth, and new listings.
Coronation Research in its Weekly Report seen by NewsNGR also reported that its Model Equity Portfolio has delivered a notional return of 45.96 per cent year-to-date in 2024, outpacing the NGX All-Share Index’s 30.69 per cent return by a substantial margin.
The portfolio’s 2024 performance reflects an exceptional year, with a year-to-date outperformance of 1,527 basis points—well above its four-year average annual outperformance of 466 basis points.
The analysts attributed their success to timely strategic decisions, including an underweight position in banking stocks early in the year and a brief but effective underweight in Airtel Africa.
However, the standout contributor was a double overweight position in Seplat Energy, which has been the portfolio’s main conviction trade in 2024.
Additionally, a fortuitous overweight position in Dangote Cement during its January rally of 98.3 per cent over two weeks, combined with a slight overweight in BUA Cement, significantly boosted the portfolio’s early-year performance.
By the end of January, the Model Equity Portfolio had already outperformed the market by 596 basis points, a feat described by Coronation Research as both strategic and serendipitous.
“Outperformance often demands deliberate positioning, but sometimes, as in the case of January’s cement stock rallies, luck plays a part,” the analysts noted. They emphasized the importance of maintaining neutral positions in the largest stocks by index weight to avoid the risk of underperformance during major rallies.
As the NGX All-Share Index continues its impressive trajectory, Coronation Research emphasizes the importance of disciplined portfolio management and strategic positioning.
By focusing on high-conviction trades and maintaining a clear understanding of market drivers, investors can navigate the complexities of the Nigerian equities market to achieve sustained outperformance.