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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » Market Research

Market Research

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1Market Research  Empty Market Research Wed Feb 19, 2020 4:19 pm

Ekanayake90

Ekanayake90
Manager - Equity Analytics
Manager - Equity Analytics
FCR upgrades ASPI target for December to 7,500 amidst added boost to economy

Author LBO
Posted on February 19, 2020 | Companies, Lead Story, Markets
First-Capital

Feb 19, 2020 (LBO) – With the recovery in economic activity and company earnings, First Capital Research (FCR) expects an upward trend in the capital market supported by stronger market multiples.

Launching the Strategy Report 2020, Head of Research at the First Capital Holdings, Dimantha Mathew said that the heavy tax cuts and the policy rate cut is likely to be an added boost for company earnings.

“Considering the mid-term positive impact, we upgrade our equity exposure to 100% while maintaining our ASPI expectations for Jun 2020 at 6,500, assuming Market PER to be in the range of 8.5x – 9.5x,” he said.

“However, we upgrade our ASPI target for Dec 2020 to 7,500 from the previous 7,000 amidst the added boost to the economy,”

In previous years, First Capital Research recommended investors only to invest a portion of the funds targeted towards equity investments while maintaining a cash allocation.

“However, considering the attractiveness of the market we recommend investors invest 100% or fully invest the equity allocated funds into the portfolio.”


TOP RECOMMENDATIONS for 2020
Following the Presidential elections and appointment of the new Cabinet, the Political uncertainty which prevailed for an extended duration has eased providing stability and policy certainty for investors.

It has also given a major boost to business confidence as the LMD-Nielsen business confidence index jumps to a 51-month high of 186 for Dec 2019.

On 27th Nov 2019, Government announced hefty tax reliefs including reducing VAT to 8% (from 15%), abolishing NBT and revising PAYE tax with the expectation of increasing the consumer spending while boosting the economic growth of the country.

As an extension to the stimulus package, Govt. took measures to remove DRL on banks and NBFIs and revise downwards the corporate tax rates across all sectors.

Further, supporting Govt.’s efforts to revive growth CBSL on 30th Jan took to cut policy rates by 50bps despite credit growth accelerating in Nov and Dec 2019.

“With the potentially stable external environment, we expect the USD/LKR rate to remain stable in the 1H2020,” he said.

“As consumer demand accelerates towards 2H, we expect to witness a possible weakness in the currency.”



Last edited by Ekanayake90 on Wed Feb 19, 2020 4:25 pm; edited 1 time in total

2Market Research  Empty Re: Market Research Wed Feb 19, 2020 4:23 pm

Ekanayake90

Ekanayake90
Manager - Equity Analytics
Manager - Equity Analytics
Market Research  753ed310

3Market Research  Empty Re: Market Research Wed Feb 19, 2020 8:04 pm

Ekanayake90

Ekanayake90
Manager - Equity Analytics
Manager - Equity Analytics
Market Research  9ed7e610

- The stock market has experienced more positive years than negative years
- For the past 35 years, the index posted positive calendar year returns 60% of the time and negative calendar returns 40% of the time
- The worst calendar year return was -41% posted in 2008, during the global financial crisis and at the height of the war. The best return was 125% posted in 2009 at the end of the war
- Regardless of the bad press on the stock market, #listed #equities have delivered #wealth for its participants over time. ASI has posted an average calendar year return of 42% over the positive years and -15% over the negative years

As data indicates, the pattern of #returns differs over the years. Thus anyone who chooses to #invest in listed equities, should learn to accept the negative years. You need courage and patience to stay invested through #bearmarket since no one can consistently time the market to get in and out and skip down years.

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