Thursday, December 20, 2012 / The Analyst
“Insights from deep historical research shows measurement indices point to more winning stocks in 2013”
In the year 2012, investors were cautious towards investments in the equities market, displaying a moderate but fluctuating risk appetite, particularly in the early periods as crunched data have shown.
Apart from the brilliant recovery initiatives from stakeholders and regulators, the real game changer was the introduction of market-making in the year while the forbearance package from the Government of Nigeria (GON) consolidated all the impressive recovery initiatives by management of the NSE. This key success factors (not discounting the impact of timing and exhaustion of pending issues) has moved the market from a bottomed-out position into an accumulation phase.
We are really optimistic about the possibility of a continued accumulation trend in the New Year which might then possibly take the market to a price mark-up phase. Given that uncertainty and volatility rule stock markets, it is pertinent to assume that the analysis here serves as a rational guide towards investment in equities in 2013.
Despite the impressive returns witnessed in the market so far and the possibility of more impressive gains before the year end, we acknowledge that some investors in 2012 had their fair share of losses and reversals; which should encourage a more value investing approach in 2013 – the central theme of theis review/guide.
2013 – Good Reason to be Optimistic, Favourable Monetary Policies Hoped For
In 2013, the expectation is towards more market gyration along with sustained accumulation trends, mainly from the sophisticated traders. Proprietary trading will wear a new look in the year, considering the absence of debt overhang, while more stock traders may cautiously return to the market as attention shifts from ‘bond to equity market’ as the sentiments suggests more rewarding atmosphere in the equity market during the year. Needless to add, this position will be aided by more favourable monetary policies in order to solidify the healthy baseline achieved so far.
Having said that, we are cautiously optimistic that market performance will stay above the two digits of inflation figure as investments in equities is encouraged by returns, particularly towards value stocks within medium capitalisation that are trading at penny prices currently. These stocks may dominate investors’ radar in the new year.
To maximise the benefits that is on the horizon, we solicit a long term investment strategy for appreciable returns irrespective of your needs, returns expectation and risk profile - this is absolutely necessary because speculative trading is likely to be the order of the day as proprietary trading improves in 2013.
Where You May Shop From
As an income investor, you may need to concentrate and accumulate stocks that have a reasonably good history of steady yield in terms of continued price appreciation, dividends and bonuses, even as your portfolio experiences swings as market gyration moves up and down. And for higher returns, you may need to buy high-dividend blue-chip stocks at the current low prices - probably below sector average price.
In this review, we did not give growth investors much attention as they are considered sophisticated swings traders in the market. They may take solace in the certainty of momentums.
In the table below, performance of all listed equities have been reviewed and ranked, taking their three years historical performances into consideration as this technically revealed a deep insight into investors’ sentiments while providing us a better and robust guide to the bargain outlook in the coming year.
In our summarised analysis below, stocks marked in amber colour are the set of stocks that have performed and still performing impressively with strong tendency to sustain the trend as the sentiments and historical trends have indicated. They have completely recovered from the market crash and strongly regained investors bargain confidence as some of them are already trading at their five-years high.
On the other hand, stocks marked red are the set that have not been doing well in the past and still not doing well in the current year as majority in red are trading within the range of their five years low - an indication of sustained negative sentiments towards the stocks. Though, their depressed postures may ignite intermittent rally in the year.
The tables below show details of the listed equities and serve as a first line guide to where value resides and as a shopping aide memoiré in 2013, even as sentiments appear bullish.
3yrs Performance History with YTD Gains
5yrs History of Dividend Paying Equities - With YTD Gains
The Full Investment Guide in 2013 will be released in January 2013.
About the Authors: Taiwo OLOGBON-ORI is an analyst in Proshare and Reshu BAGGA is a Director for The Analyst & COO, Technical Services.
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