Equity Portfolio Performance 2014-2017
As at 31st Dec 2017 at 2018, First Capital Research Top Recommendations have achieved a Capital Gain of 6.4% (Excluding Dividends) compared to the market performance of 2.3%.
Following are our current and previous top recommendations and their performances for 2014, 2015, 2016 & 2017 for your reference.
Top Recommendations for 2018
Brief Equity Outlook
Market earnings: The current tight monetary policy has slowed down the economy significantly reducing earnings growth for most companies. The situation is expected to ease off towards 2H2018. Therefore the companies are likely to have a better earnings performance in 2018E/19E compared to the weak performance we are experiencing in CY17/FY18E. We believe overall market earnings are likely to grow by a modest 5%-7% during 2018E/FY19E supported by a recovery in economic performance in the 2H2018. Earnings Growth is likely to accelerate to 10%-12% towards CY19E/FY20E backed by further improvement in economic health of the country and also easing of the monetary policy with more stability in the system.
Market Returns: Market returns are likely to be slow but positive in the 1H2018 due to attractive valuations prevailing in the economy and is likely to improve in the 2H2018 supported by expectations of a better economic outlook and earnings performance. Thereby, we expect overall market returns are likely to be 10%-12% approximately 50% above the expected earnings performance as some counters are likely to re-rate with an expected better earnings outlook in the future. In terms of the ASPI index it is only likely to reach 7000 (+10% or +650 points) towards end of 2018. Market returns are likely to accelerate towards the 2019 to about 15% with the actual earnings performance and renewed investor confidence. Index is likely reach 8000 level (+15% or +1000 points) towards 2019. These targets however are highly dependent on the current stable outlook and reform agenda continuing during 2018 as well.
Key Sectors: We believe the key sectors that are likely to outperform the market and expected provide high returns are the Banking Sector, Building Materials Sector and Apparel Sector while the energy sector also may turnaround depending on the implementation of the pricing formulas by the Government which is also a condition of the IMF.