Why investing in consumer goods was better than investing in banks in 2021

Why investing in consumer goods was better than investing in banks in 2021

The Consumer Goods sector had a stellar performance in 2021 as its index grew by 2.78% from 573.35 basis points at the beginning of 2021 to end the year at 589.28 basis points. The Consumer Goods index outperformed the banking sector index that lost 2.15% in the same period from 2052.33 basis points at the beginning to end the year at 2008.3 basis points.

Even though the Nigerian Exchange Group had a good 2021, in 2020, the market was one of the best-performing markets in the world gaining over 50%. This feat came in a year where the whole world was hit by the economic impact caused by the COVID-19 pandemic.

The NGX closed the year 2021 on a positive note, gaining 6.07%, with its ASI trading 42,716.44 basis points on the last trading day of the year, putting the total market capitalization at N22.30 trillion.

Read: Nigerian banks earn N88.9 billion from account maintenance in 9 months 2021

The total market capitalization for the Consumer Goods sector currently accounts for 11.79% of the total market capitalization of the entire NGX as at the last trading day of the year. The consumer goods sector contributed a whopping N116 billion to the NGX market capitalization in 2021, representing a 4.62% gain.

On the other hand, the banking sector accounts for 16.05% of the total market capitalization of the NGX. The decline in the sector means the sector contributed negatively to the market capitalization by N73.5 billion, representing a 2.01% decline.

Due to the high inflation rate plaguing the country in 2021, especially the increase in food inflation, the prices of consumer goods increased significantly in the year 2021. Due to inflation, more money is chasing fewer goods and this contributed positively to the consumer sectors’ books, as it revealed an improved performance in their income statements and that ultimately led to a rally in the share prices of 66.67% or 14 consumer goods stocks in 2021.

Read: Access Bank, FBN lead as Nigerian banks rake in N200 billion from e-business in 9M 2021

The consumer goods index is made up of 21 stocks and the highest performer of them all is Honeywell Flour Mills which gained a whopping 183.33% in 2021, ranking 11th in the index, contributing approximately N27 billion.

The banking sector is made up of 13 stocks and the year 2021 saw a contrast in nearly 50% or 6 stocks contributing to the […]

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