Investigation conducted by Insuranceadvicenigeria.com has revealed a huge surge in the demand for insurance stocks since the beginning of 2013. Insurance stocks, which had been labelled penny stocks, have continued to attract serious attention from discerning investors in the Nigerian capital market.
Unlike in the past when most investors get their fingers burnt, investors who bought insurance stocks in 2013 have reaped huge capital gains of up to 100% between the first day of trading in the year and February 22nd, 2013 when the survey was conducted ( See the Table below)
|Stock (Company)||Price as @ Dec 28, 2012||Price as @ Jan 2, 2013||Price as @ Feb 22, 2013|
** Daily Official List of the Nigeria Stock Exchange For the Days*
Analysts have identified three major reasons for the resurgence of insurance stocks:
#1: Impact of NAICOM’s No Premium No Cover Directive which is impacting positively on insurers’ premium collection
#2: Mergers and Acquisitions activities in the insurance sector which impacted Custodian & Allied and Wapic stocks.
#3: The penny nature of the stocks which makes it easier for investors to buy low and sell high thus creating bigger room for higher capital gains.
This surge has also seen the market capitalisation of the insurance sector going up