This year also brings challenges for investment in equities, especially in what has to do with the stock market. We tell you what you should consider if you want to participate in this investment.
Any person on foot can participate in the stock market. That a millionaire, with a big mustache, a top hat and a portfolio full of bundles of bills was the only one who could approach a stockbroker is a matter of the past. People ‘on foot’, university students who know the importance of saving, housewives, professionals who begin to generate the first income of their working life, any entrepreneur who has extra money who prefers to invest, instead of putting it Under the mattress, you can train to buy a stake in a company.
That is precisely the investment in shares, which is nothing more than putting securities of a company in the hands of investors. It is a win-win in every way because companies generally obtain financing for their growth plans at much lower costs than bank credit , and investors, when there are times of the ‘fat cows’, receive the return of their bet of two ways: one is the same profitability of the action, because if they bought something from 1,000 and sold 2,000 they won 100% of the investment. And if there were profits, these are shared among the shareholders.
Of course, when you can not, you can not and that happened in 2016 with Ecopetrol, the share of the largest oil company in Colombia, where the Nation has a share of more than 80% and the rest is in the hands of institutional investors such as foreign investment funds, Colombian pension funds, and individuals. In that year, due to the price of oil and the results of the company, there were no profits to distribute.
Anyway, let’s go back to the story that interests you if you are reading this and is looking at what could happen the rest of the year with the investment inequities that are traded through the Colombian Stock Exchange (BVC). We want to tell you that if you endured 2016 and 2017, with your quiet actions, this 2018 may still have room for further appreciation.
According to estimates of Old Mutual, the valuation of the Colcap (the index that measures a basket of stocks that are more traded in the BVC), will have in 2018 a return of 5.49%, after increases of 17.1% in 2016 and 12.01% in 2017. That is an appreciation in the last 3 years of more than 35%, an important utility.
According to Catalina Tobón, director of economic research at Old Mutual, there is room for valuation for Colombian shares. And do not be scared by the deterioration in the generation of profits in some companies, since the “multiples of valuation indicate that the local market is at a deviation from its fair value,” says the expert.
“Likewise, the expectations regarding the future results of the companies measured by the price-profit ratio (RPG) expected for 2017, shows that some issuers. the potential to value up to match their average historical valuation, “says the report of Old Mutual.
In addition, given an expectation of an acceleration in local economic growth by 2018, the market could continue to privilege a growth strategy, especially in shares of companies such as Éxito, Conconcreto, and ISA.
Who sells and buy?
In its recent report of participants in the stock market of Davivienda Corredores, corresponding to February, we see how foreigners bet on the local stock market, where they were net buyers in January. This group of investors positioned itself as the most important buyers of the month with purchases of $ 214,000 million concentrated in Bancolombia’s preferential share ($ 84,000 million) and the ordinary Bancolombia share ($ 64,000 million)
On the contrary, the sellers of that month were the natural persons, who chose to sell Ecopetrol ($ 107,000 million) and Exit ($ 88,000 million).
Tips for investing in the stock market
- Equities are a market that at this moment presents greater volatility in returns compared to other assets such as fixed income.
- Even more so if equities are part of an emerging market, their volatility can be even greater.
- This is the case of Colombia, where there is also an important weight of oil stocks that register an even greater volatility given a high correlation with the price of crude oil.
- In this sense, a person with a moderate or aggressive profile is recommended to invest in this type of asset.
- Additionally, it is important not only to take into account the risk profile but also the investment horizon.
- Preferably, it is recommended that a person who invests in shares do so with a horizon greater than two years.