Managing Director/CEO, Coronation Asset Management, Aigbovbioise Aig- Imoukhuede has said Nigerian listed equities, if properly selected, can deliver an adequate return to investors over the long term.
He spoke during a webinar and release of the Coronation Research titled: ‘Equities for a superior return’. The report was written by Head Research at Coronation Asset Management, Guy Czartoryski and Adebayo Adebanjo.
The report challenges the widely-held opinions about Nigerian investments, in particular views about the equity market.
The report said that as Nigerian investors face a third successive year of T-bill rates were below the rate of inflation.
“Which Nigerian investments beat inflation over the long term?” The surprising answer to this question is: “Equities”. Coronation Research has studied equity returns during the period from 1 January 2016 until now. While the performance of the NGX All-Share Index was not strong, the performance of a selection of the most profitable NGX-listed companies has provided superior and inflation-beating returns,” the report said.
“So, the return of the NGX All-Share Index from 1 January 2016 to 30 September 2021 was 40.50 per cent or a compound annual growth rate (CAGR) of 6.15 per cent. With gross dividends reinvested, that rose to a CAGR of 12.44 per cent. But neither return would have beaten inflation over the same period, which averaged 14.26 per cent per annum”.
However, a basket of 10 NGX-listed companies, each with a long-term and sustainable Return on Equity (RoE) of 20.5 per cent or more, would have delivered an investment return with a CAGR of 16.36 per cent from January 1, 2016 to 30 September 2021. With dividends reinvested, this would have risen to a compound annual growth rate of 24.71 per cent.
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