Investors are rotating into small capitalised insurance stocks, helping them to emerge as the top performers so far in 2021.
Led by Lasaco Assurance which is up 340 percent to be the best performing stock on the Nigerian Stock Exchange (NSE), other insurance stocks that have rallied so far this year include, Royal Exchange up 134.46 percent, Mutual Benefits up 62.96 percent and Consolidated Hallmark Insurance up 59.38 percent.
The NSE all share index (NSE-ASI) by comparison is down -4.83 percent year to date.
Small caps usually have market capitalization below N50 billion, meaning they have the potential to rally much from such a low base, if investors see a growth path for them.
Nigerian insurers are largely ripe for consolidation and growth after the regulator NAICOM issued new guidelines requiring them to increase their capital base.
Other sectors that have rallied this year include food and beverage with Champions Breweries up 146.5 percent and Guinness Nigeria up 52.63 percent.
Bank stocks for the most part are underperforming this year.
The NSE Banking index has returned -7.94 percent so far this year, led by the slide in major names including United Bank for Africa -16.18 percent, Guaranty Trust Bank -9.58 percent, Zenith Bank – 7.26 percent and Access Bank – 2.37 percent.