The explosive rally in the Nigerian Stock-Market that has added N3.4 trillion in market capitalization since the lows of April 08 have been led by a few technology, Cement and Financial stocks.
Nigerian stocks are up some 7,000 points since the lows hit on April 08, 2020.
An analysis of the NSE-30 or the list of the 30 largest and most liquid stocks traded on the Nigerian Stock Exchange (NSE) shows that the index was responsible for some N2.9 trillion or 85 percent of the jump in stock market values since April.
The few firms responsible for the major stock-market rally include MTN Nigeria, Dangote Cement, Guaranty Trust Bank, Nestle Nigeria, Stanbic IBTC, and BUA Cement, according to data compiled by MoneyCentral.
MTN Nigeria the largest listed firm on the NSE has added some N814 billion in market capitalization since April 08 alone. The stock which closed trading on April 08 at N95 now trades at N135 per share.
Dangote Cement has added N461 billion, Guaranty Trust Bank N335.6 billion, BUA Cement N348 billion, Nestle Nigeria N325 billion, and Stanbic IBTC N177.69 billion to market capitalization since April, to round off the top 6 for a combined N2.46 trillion increase in market cap.
This means that just six firms are responsible for 72 percent of the move up in stocks since April 08, showcasing the importance of stock picking to a portfolio.
See Chart Below
 Laggards
While most NSE-30 stocks are higher today than they were in April, there are a few laggards that have barely moved since then or are even lower.
They are largely cyclicals (Julius Berger, Seplat, Total) consumer goods firms (Flour Mills, International Breweries) or financials seen by the market as unattractive or having poor execution by management (Fidelity Bank, ETI, Union Bank, Custodian Investments).
Some firms have also outperformed others within the same sector. For instance, Nigerian Breweries stock is up 119 percent since April to N48.8 per share it closed trading at yesterday, while International Breweries is down 20 percent in the same time frame to N3.9 per share from N4.9 in April.
Banks like ETI, Fidelity and Union Bank have also largely underperformed the likes of Guaranty Trust Bank, Stanbic IBTC, UBA and FBN Holdings.
Bottomline
During the worst of the Coronavirus economic lockdown and panic in April, most Nigerian Stocks sold off to multiyear lows. Since then however a few have rebounded as investors pick the likely winners once the dust settles and the economy begins to grow strongly once again.
The analysis clearly shows where money is flowing into a select few names, leading to a powerful stock-market rally and investors will be wise to mimic the smart money.