Insurance firms in ‘strange’ rally, post 41 per cent gain in one week
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For the first time in several months, the insurance index led the gainers’ chart on the Nigerian Exchange Limited (NGX) with 41 per cent, following over 50 per cent price appreciation recorded in Mutual Benefits Assurance, AIICO Insurance, Royal Exchange Insurance, Sovereign Trust Insurance (SOVRENINS) and Cornerstone Insurance Plc last week.
The sector’s rally was fuelled by renewed investor confidence following the signing of the New Insurance Act last week. The signing triggered optimism about imminent recapitalisation and far-reaching regulatory reforms.
Investors anticipate improved industry compliance, operational efficiency and capital appreciation.A breakdown of performance in the sector showed that Mutual Benefits Assurance led the rally with a 60 per cent rise, closely followed by AIICO Insurance, which climbed 59.8 per cent. Royal Exchange advanced by 59.3.per cent, Sovereign Trust Insurance gained 59.1 per cent while Cornerstone Insurance appreciated by 54.5 per cent.
The industrial index followed with 8.73 per cent. The sector gain was due to price appreciation of 13.9 per cent and 9.2 per cent recorded by cement-producing giants – BUA Cement and Dangote Cement. The consumer goods index trailed with an 8.3 per cent weekly gain, bolstered by strong upward momentum in BUA Foods, Guinness Nigeria and Ellah Lakes.
The oil and gas sector posted only a modest 0.17 per cent uptick, supported by mild advances in Oando and Japaul Gold & Ventures. In contrast, the commodities sector retreated by 2.33 per cent, weighed down by losses in Total and Presco. The banking sector slipped by 0.75 per cent as investors took profits from major operators, including Zenith Bank, Fidelity Bank and Access Holdings.
On the losers’ table, Living Trust recorded the steepest decline of the week, shedding 24.1 per cent. Academy Press followed with an 18.2 per cent drop, while TIP fell by 12.7 per cent. UPDC Real Estate Investment Trust (UPDCREIT) lost 11.8 per cent, and Legend International (LEGENDINT) declined by 11.7 per cent, reflecting pockets of weakness in a generally bullish market environment.
The all-share index advanced by 3.18 per cent to close at 145,754.91 points. Also, the market capitalisation surged by N2.84 trillion to N92.21 trillion, bringing the year-to-date return to 41.61 per cent.
Investor sentiment remained largely positive throughout the week, as 66 stocks gained while 41 constituted the losers’ chart. Analysts at Cowry Asset Management Limited said trading on the Nigerian Exchange Limited will likely deliver a mixed performance this week as bullish and bearish
forces continue to compete for dominance in shaping market direction.
While acknowledging the possibility of intermittent profit-taking and sectoral pullbacks, the analysts maintained that the underlying sentiment in the market remains largely positive, underpinned by sustained interest in fundamentally strong stocks and sectors with compelling growth narratives.
They noted that investors are expected to maintain an active focus on the insurance, consumer goods, and select industrial goods counters, given their recent performance, favourable valuations, and solid growth prospects.
The insurance sector is likely to remain at the centre of market activity following its recent surge, which has been driven by optimism over the newly enacted Insurance Act, anticipated recapitalisation measures and broader regulatory reforms aimed at strengthening the sector’s competitiveness. This reform-driven outlook, coupled with robust price momentum, is expected to sustain buying interest from both institutional and retail players.
