Most investors heaved a sigh of relief when 2022 finally came to an end.
It was a year that saw currencies like the British Pound hit lows from the early 80s, cryptocurrencies like Bitcoin lose 65% and stockpickers “favourites” like Tesla, Apple and Amazon perform very poorly.
Not to mention the war in Ukraine and the energy crisis all over Europe, many had only bleak economic projections for 2023. Fortunately, this year has been better than the last!
More experienced investors understand that the economy operates in cycles. Down cycles and a trough, then an upcycle with a crest or turning point. In the words of legendary investor Warren Buffett,
- “Be greedy when others and fearful and fearful when others are greedy”.
The year started with a slow rebound and gradual easing of interest rates globally following a very hawkish stance from the US Feds, the Bank of England and the European Central Bank ECB in 2022.
These were early signs that stocks and other assets considered risky have the potential for a run. It is indeed easier for risk assets to rally in low inflationary environments as investors generally consider it a risk-off scenario.
In Nigeria, the inflation rates have continued to drop steadily instead with inflation hitting 22.41% in May.
Despite the high inflationary environment, stocks in the Nigerian stock exchange have done relatively well in the first half with stocks like MTN Nigeria(29.30%), Dangote Cement (24.90%), and the benchmark index NGX ASI(24.97%), all printing double-digit gains. Some stocks surprisingly registered three-digit returns, these include BUA FOODS(100%), Conoil PLC(119%), and Transnational Corporation of Nigeria (173%). Although these kinds of numbers in the Nigerian market are not entirely ridiculous, the prevailing macroeconomic conditions and the uncertainties that becloud the Nigerian foreign exchange make the numbers all the more impressive.
Top performing sectors in the US
● Technology: The technology sector led the pack this year. The sector has a YTD return of 26.54%. The main sub-sectors that had been major drivers are the semiconductor and AI sector with chip producer Nvidia(NVDA) producing a YTD return of 206.04%.
Palo Alto Networks(PANW) is the second highest-performing tech stock with a 83.1% YTD return. The Technology Select Sector ETF Fund XLK has a 41.09% YTD return.
● Energy: The US energy sector saw massive growth with many companies in the sector registering decent growth in revenue and profits. EQT Corporation, the highest producer of oil and gas in the US saw a 21.6% YTD return, followed by Baker Hughes, a petroleum engineering services company registering a 7.0% YTD return. The Energy Select Sector ETF Fund XLE has a -2.13% YTD return.
● Healthcare: The health and wellness sector in the US saw very positive growth in the first half of the year with multiple companies seeing triple-digit growth and returns. The top gainer in the sector is Moonlake Immunotherapy (MLTX) a pioneer inflammation treatment company with a 376.86% YTD return. Other top gainers in the sector includes, Oscar health OSCR(227.6%), Immunogen Inc IMGN(280.4%).4
Top performing sectors in Nigeria
● Hospitality and wellness sector: The sector is indeed a surprising top performer for the first half of the year considering the harsh economic conditions. Many expected the sector to suffer as fewer people have the means to afford luxury. However, a company from this sector, Transcorp Corporation of Nigeria(173%) has the highest returns for any stock in the first half of the year. This may be linked to the acquisition of some of the company’s shares by popular billionaire Femi Otedola earlier in the year.
● Food and consumer goods: The sector has seen impressive growth in Q1 and Q2 of 2023 with BUA foods leading the pack with a 100% YTD returns. Cadbury and PZ Cussons Nigeria PLC also printed double digit returns with 50% and 49% respectively.
● Telecommunications: The telecommunications sector in Nigeria is one of the fastest growing sectors with total investment in the sector hitting $75.6 b in June 2023. Leading giants like MTN Nigeria yielded a 27.30% YTD in the first two quarters of the year. Other big telcos however have had poor performances like Airtel Africa (-23.80%).
Top performing cryptocurrencies
Cryptocurrencies have had a rather good run this first half with some doing three-digit returns. Among the top 10 cryptos, SOL yielded the highest return with a 155.09% YTD return.
The largest cryptocurrency by market cap BTC has an 89.37% gain this year alone. Other top gainers include; ETH(66.96%), XRP(120.76%), LTC(48.76%).
Top performing commodities
Top commodities had a bad run this first half of the year as many of them suffered after a great run in 2022. Gold, Soybeans, Crude, and Copper all had a negative first half of the year. The losers are; Soybeans(-11.43%), Crude(-21.05%). However, some commodities had a great performance like orange juice(32.65%), London cocoa(26.62%).
Top performing ETFs
With the better-than-average returns of stocks and other assets, ETFs also followed in the same fashion. Most ETFs had double digit returns with popular ones like NASDAQ(35.08%), S&P(17.46%), Rusell Vanguard 1000(29.1%), Technology Select Sector SPDR Fund(XLK)(35.91%), Energy Select Sector SPDR Fund(23.28%), FTSE100(-0.15%), Nikkei 225(24.13%).
