Equity Overview - Internal Presentations RK
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© 2010 First Citizens Investment Services Limited. All rights reserved. An Overview of the Equity Market May 2013
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Transcript of Equity Overview - Internal Presentations RK
© 2010 First Citizens Investment Services Limited. All rights reserved.
An Overview of the Equity Market
May 2013
Presentation Outline
Features of a Stock
Types of Shares
International Stock Market Indices
What Drives Stock Prices
Trinidad and Tobago Stock Exchange
Common Rules to Investing in the Stock Market
Investment Instruments
Features of a Stock
Growth Stock: A stock that experiences a continued period of growth
exceeding that of the economy. Generally, the duration is over a year in
length. Google
Income Stock: A stock that has a high, consistent, dividend paid
annually. Coca-Cola
Speculative Stock: Stocks that offer the potential for substantial price
appreciation, usually because of some special situation such as new
management or the introduction of a promising new product. Facebook
Features of Common Stock cont’d…
Cyclical Stocks: these are stocks whose earnings and overall market
performance are closely linked to the general state of the economy.
General Motors
Defensive Stocks: these stocks tend to hold their own, and even do well,
when the economy starts to falter. Walmart
Mid-cap stocks: are medium-sized companies, generally with market
values of less than $4-$5 billion but more than $1 billion. Macy’s
Small-cap stocks: are stocks that generally have market values of less
than $1 billion but can offer above-average returns. Barnes & Noble
Types of Shares
Authorized Shares: represents the total number of shares of stock
authorized when the company was created. Only a vote by the shareholders
can increase this number of shares.
Unissued Shares: shares a company retains in its treasury and not issued
to the public or to employees.
Restricted Shares: these shares refer to company stock used for
employee incentive and compensation plans (ESOP).
Float Shares: Float refers to the number of shares actually available for
trade on the open market.
Outstanding Shares: these include all the shares issued by the company,
which would be the restricted shares plus the float.
International Stock Market Indices
World Equity Index Performance 2010 – present
-5
0
5
10
15
20
25
30
35
40
BR
AZ
IL B
OV
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PA
IN
DE
X
Eu
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toxx 5
0 P
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FT
SE
100 IN
DE
X
DO
W J
ON
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IN
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S. A
VG
CA
C 4
0 IN
DE
X
ME
XIC
O IP
C IN
DE
X
S&
P 5
00
IN
DE
X
NA
SD
AQ
CO
MP
OS
ITE
IN
DE
X
HA
NG
SE
NG
IN
DE
X
DA
X IN
DE
X
NIK
KE
I 2
25
Percentage return
A Few Stock Price Factors…
Price
InflationToday’s markets
Year’s market
Analysts’ targets
Industry stocks
Fear and greed
Hype
Supply and demand
Stock momentum
Chart patterns
Terrorist attacks
World news
Stock Market Crashes…
1995-2001
The ‘dot-com bubble’
A speculative bubble between 1995-2001 during which the stock markets of the U.S. and
other western nations saw rapid growth fueled by the Internet sector and related fields.
2001
9/11
The September 11 attacks caused global stock markets to drop sharply. The attacks
themselves caused approximately $40 billion in insurance losses, making it one of the
largest insured events ever.
2008
The financial crisis
The subprime mortgage crisis in the United States led to a sharp fall in equity markets
which filtered into global capital markets. This fueled the global recession which many
economies are still struggling to overcome
Listed Companies
BANKING Symbol CONGLOMERATES Symbol
Bcb Holdings Limited BCBTT ANSA McAl LIMITED AMCL
Firstcaribbean International Bank Limited FCI Gracekennedy Limited GKC
National Commercial Bank Jamaica Limited NCBJ Neal & Massy Holdings Limited NML
Republic Bank Limited RBL
Scotiabank Trinidad & Tobago Limited SBTT MANUFACTURING I
Angostura Holdings Limited AHL
PROPERTY Guardian Media Limited GML
Point Lisas Industrial Port Development Corporation
Limited PLD National Flour Mills Limited NFM
One Caribbean Media Limited OCM
MANUFACTURING II The West Indian Tobacco Company Limited WCO
Berger Paints Trinidad Limited BER Unilever Caribbean Limited UCL
Flavorite Foods Limited FFL
Readymix (West Indies) Limited RML NON-BANKING FINANCE
Trinidad Cement Limited TCL Ansa Merchant Bank Limited AMBL
Guardian Holdings Limited GHL
TRADING Jamaica Money Market Brokers Limited JMMB
Agostini's Limited AGL National Enterprises Limited NEL
Prestige Holdings Limited PHL Sagicor Financial Corporation SFC
Williams Lj B LJWB Scotia Investments Jamaica Limited SIJL
MUTUAL FUND
Clico Investment Fund CIF
Cross Listed Companies
Bcb Holdings Limited
Firstcaribbean International Bank Limited
National Commercial Bank Jamaica Limited
Gracekennedy Limited
Jamaica Money Market Brokers Limited
Sagicor Financial Corporation
Scotia Investments Jamaica Limited
Why cross list?
What are the risks?
FCBAS facilitates trading on:
The Barbados Stock Exchange (BSE)
The Eastern Caribbean Stock Exchange (ECSE);
The Jamaican Stock Exchange (JSE)
Regional Stock Exchanges
Types of Orders
Market Order
This simply tells your broker to buy or sell as the current market price
Limit order
This order can be used to enter or exit a trade. It specifies a price
that the client/trader is willing to pay or accept (or better)
There are buy limits and sell limit orders
Trinidad and Tobago Composite Index
TTSE Composite Index: Daily
2005 – 20 January 2014
400
500
600
700
800
900
1,000
1,100
1,200
1,300
0
40,000
80,000
120,000
160,000
200,000
240,000
280,000
320,000
360,000
400,000
440,000
480,000
1/4
/20
05
1/4
/20
06
1/4
/20
07
1/4
/20
08
1/4
/20
09
1/4
/20
10
1/4
/20
11
1/4
/20
12
1/4
/20
13
1/4
/20
14
Ind
ex V
alu
e
Vo
lum
e T
rad
ed
Th
ou
san
ds
Volume Traded TTCI Index Value
TTSE Composite Index (year on year) Returns
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
20
13
20
12
20
11
20
10
20
09
20
08
20
07
20
06
20
05
20
04
20
03
20
02
20
01
20
00
TTSE Composite Index (year on year) returns
A Look at 2013
TCL 23%
CIF20%
JMMB 13%
SFC 9%
NCBJ 5%
Other30%
TTSE Volume leaders -2013
TCL
CIF
JMMB
SFC
NCBJ
Other
Top Advancers
FIRST 82.95%
NFM 58.33%
TCL 47.65%
WCO 41.18%
AHL 38.71%
Top Decliners
PPMF -22.83%
NCBJ -22.92%
GHL -24.32%
LJWB -26.97%
SIJL -34.78%
Market/ Trading Activity
RBL vs SBTT
RBL vs SBTT
Earnings per Share
Dividend yield
2010 2011 2012
RBL $6.19 $7.06 $7.27
SBTT $2.89 $3.09 $3.09
2010 2011 2012
RBL 3.4% 4.3% 4.0%
SBTT 3.0% 2.6% 2.4%
Challenges Facing the Local Market
Liquidity Constraints
Seen from high bid-ask spreads
Major shareholders
Herd Mentality
Transparency
BUY and HOLD mentality
Few players in the market influencing price movements
Low confidence in the economy
Common Rules to Investing in the Stock Market…
A good company usually provides returns for investors
You may lose money in a very short time, but it takes a long time to
make money
The stock market isn’t a gamble as long as you select good
companies that you THINK will do well and not just because of the
current stock price
RESEARCH: You have to research a company before you put
money into it
Common Rules to Investing in the Stock Market…
When you invest in the stock market, you should always diversify
to reduce volatility and improve overall performance of your stock
portfolio
Just because a stock goes down, doesn’t mean it can’t go lower
Over the long-term it is generally better to buy stocks companies
with good long-term prospects
Never buy a stock because it is cheap, but because you know a
lot about it
Remember when buying stocks you are buying the company
Common Mistakes to Avoid…
Thinking that this year will be any different from any other year
Becoming too concerned over whether the stock market is going
up or down
Trying to time the market
Not knowing the story behind the company in which you are
buying the stock
Buying stocks for the short-term
Stock Market Jargon…
Bull market
A financial market of a group of securities
in which prices are rising or are expected to
rise. Bull markets are characterized by
optimism, investor confidence and
expectations that strong results will
continue
Bear Market
A market condition in which the
prices of securities are falling, and
widespread pessimism causes the
negative sentiment to be self-
sustaining. As investors anticipate
losses in a bear market and selling
continues, pessimism only grows.
Stock Market Jargon…
Market capitalization
The total dollar value of all outstanding
shares. Computed as shares times
current market price. Capitalization is a
measure of corporate size.
Capital Gains
When a stock is sold for a profit, the
capital gain is the difference
between the net sales price of the
securities and their net cost, or
original basis. If a stock is sold
below cost, the difference is a
capital loss.
Offer: Indicates a willingness to
SELL at a given price
Bid Price: price a potential buyer is
willing to pay for a security
Bid/ Ask Spread: the difference
between what buyers are willing to
pay and what sellers are asking for
in terms of price.
Stock Market Jargon…
Public Company
A company that has held an initial public
offering and whose shares are traded on
a stock exchange or in the over-the-
counter market. Public companies are
subject to periodic filing and other
obligations under the federal securities
laws.
Technical Analysis
Security analysis that seeks to
detect and interpret patterns in past
security prices.
Fundamental Analysis
Security analysis that seeks to detect
‘misvalued’ securities through an
analysis of the firm's business prospects.
Research often focuses on earnings,
dividend prospects, expectations for
future interest rates, and risk evaluation
of the firm
Market Value
What investors believe a firm is worth. The
price at which a security is trading and could
presumably be purchased or sold
Undervalued security
A security selling below its market value
Overvalued security
A security selling above its market value
Initial Public Offering…
IPO
The first sale of stock by a private company to
the public. IPOs are often issued by smaller,
younger companies seeking the capital to
expand, but can also be done by large privately
owned companies looking to become publicly
traded.
• At USD38 a share, FB was valued at
USD104.2 billion or 107 times trailing 12-
month earnings, more than every S&P 500
member except Amazon.com Inc. and
Equity Residential.
• Priced at the top of its range of USD34 to
USD38 per share, FB is valued at about 26
times sales in the 12 months through 31
March.
• What the bears say: FB’s valuation is too
high given the less than optimistic
expectations for their growth and revenue.
• What the bulls say: FB could use
acquisitions to bulk up its business areas
such as mobile, advertising, payments and
video-sharing
Facebook Inc.
Share Transactions with FCBAS
Account Opening:
2 forms of valid National Identification, Utility Bill, Proof of employment
Client application form, TTCD form, Bank mandate form
Fees:
50% reduction in commission charged to staff – from 1.25% to 0.625%
TTCD fee of 0.15%
No transaction fees will be charged for the IPO
For additional information please contact the Wealth Management
Team
In Summary…
• Know your risk profile
• Do your homework/
research your stocks
• Read the news
• Stocks are not short
term investments
© 2010 First Citizens Investment Services Limited. All rights reserved.
Thank You
Questions?
