Stock Market Review 2016

On the global front, 2016 featured major economic and political events that gave rise to geopolitical risks and uncertainty within the financial markets resulting in nothing less than a volatile
14 Jan 2017 11:00
Stock Market Review 2016

On the global front, 2016 featured major economic and political events that gave rise to geopolitical risks and uncertainty within the financial markets resulting in nothing less than a volatile year.


Here are some notable highlights:

Global equity markets experienced losses with investor sentiments hammered by fears of China’s economic slowdown and the subsequent effect this would have on its trading partners. The downside risks to the global economy remained elevated against given weak demand, low investment and low commodity prices. This not so great start to the calendar year was prolonged further with the continuing dip in oil prices.


On the domestic front:

The recent economic data published by the Reserve Bank of Fiji (RBF) noted sectoral outcomes for 2016 generally showing mixed results. The effect of Tropical Cyclone Winston was evident through reduced domestic supply of agricultural produce and damages sustained by key infrastructure;

In addition, the inflation rate increased to the 5percent mark during the year insinuating continued inflationary pressure in the domestic economy. Overall, given the lower than anticipated performances in key sectors, the GDP growth rate was revised to 2 percent for 2016;

On the equities front, Fiji’s stock market which is largely insulated from global markets recorded impressive gains in its key market indicators this year; overall market capitalisation, indices and trading activity. The overall capitalisation of the market recorded a strong growth on the back of greater investor demand gaining a significant 22.78 percent concluding the year at an all-time high value of $1.32 billion;

The strong financial performance recorded by several listed companies this year coupled with increases in dividend per share offered, also resulted in strong capital gains for the year.


Market Sentiments

2016 noted relatively high demand for stocks with high yields and those that have been historically more liquid. The 12-month average bid to offer ratio of 1:0.9 is testament to the excess demand over supply in the market. However, the brokers of Fiji’s three licensed stockbroking firms are to be commended for assisting with the injection of supply (shares) into the market by their respective clientele throughout the year;

A Strong ‘Hold’ and/or ‘Accumulate’ investor preference for listed securities was also observed, in particular for those stocks with dividend yields in excess of 4 percent and for listed companies that have announced expansionary plans/projects therefore providing investors with potential for capital gains, however, the growing presence of growth-oriented investors in the Fijian stock market saw sell-offs for the realization of capital gains;

The Exchange has also experienced a welcomed change in the form of investor (buy/sell) sentiments moving in line with company market announcements. We are seeing more well-informed investment decisions including the determination of share prices which are linked to developments announced by listed companies such as improved financial performance, product launch and/or acquisition plans;

Furthermore, the Exchange also noted that new investors entering the market were focused on establishing a diversified investment portfolio, investing in multiple listed stocks rather than focusing on one particular stock.  Stockbrokers have played a pivotal role in this agenda;

The current market sentiments provide a conducive environment for a successful listing by companies contemplating floating their shares to the public through SPSE.


Overall Trading Pattern

Including all the ordinary trades as well as the one-off transactions in 2016 and 2015, the number of trades via the SPSE e-trading platform for the year 2016 stood at 1,580, an increase of 55.36 percent (+563 transactions) in comparison to the same period last year; however

The total volume and value of trades for the year under review declined in comparison to 2015 (2015 December: Special Crossing Transaction between Fiji Government, FNPF, BSP Life & Unit Trust of Fiji in ATH shares). The total volume traded stood at 37,624,869 shares, a decrease of 49.59% (-37,008,121 shares) in comparison to 2015 and the total value traded stood at $58,682,893, a decrease of 35.81 percent (-$32,742,997) while comparing it to the 2015 trading statistics;

Excluding all the one-off transactions over the two years in 2015 and 2016, the number of trades for 2016 stood at 1,566, which is an increase of 55.51 percent (+559 trades), the volume traded stood at 8,536,639 shares (+412.13 percent or 6,869,753 shares) and the value traded stood at $12,781,850 (+430.97 percent or $10,374,606).


New Order Flows

New order flow into the market also recorded strong growth with a weekly average consideration of $486,582 (2015: $102,663), headed mainly by buying interests which averaged 51.14 precent of new order flow consideration; A major contributor towards the healthy new order flow statistics was the listing of Vision Investments Limited (VIL) together with participation from various retail and institutional investors, particularly iTaukei Land Trust Board as Trustee for selected Mataqali, throughout the period under review;

The average buy to sell ratio concluded at 1:0.9, indicating the strong presence of demand-side investors that are looking for suitable securities to purchase at an agreeable price.


New Investors

A total of 283 first-time shareholders invested and are now participating in the Fijian stock market in 2016;

The listing of VIL in 2016 was a significant contributor to the new investor statistics with 192 investors or 67.84 percent of the 283 new investors entering the Fijian stock market through VIL;

A majority of these new investors were retail investors who targeted securities with dividend yield in excess of 4 percent (Tax-free) and a growing number of new investors also looking for stocks showing potential for future capital gains;

Another welcomed highlight towards the conclusion of 2016 was that individuals were investing a part of their Bonus pay-out or year-long savings in the stock market during the festive season;

Overall, new investors contributed 32.34 percent (511 trades) towards the aggregate number of transactions for 2016 while 7.76 percent (2,918,591 shares) and 9.21 percent ($5,402,239) was attributed by these investors for the volume and value traded respectively.


Special Crossing Transactions

Special crossing trades are pre-negotiated deals on the sale and purchase of shares in excess of $100,000 in value and are one-off transactions.

There were a total of 14 of these special crossing transactions in 2016 executed entirely for VIL shares. The total volume and value traded was 29,088,230 shares and $45,901,043 respectively.


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