After plummeting from record to record, the Abidjan Stock Exchange (BRVM) is continuing a bearish phase that is causing debate among investors. For this reader, do not panic. It is, he says, the time to invest:
The BRVM indices (BRVM Composite and BRVM 10) were initialized at 100 points in 1998 at the start of the stock market. Today, Oct. 29, 2018, the BRVM Composite is at 177.08 points, ie 77.08% of performance and the BRVM 10 is at 169.75 points, or 69.75% of performance.
Thus, in the 20 years of existence of the BRVM, with 77.08% performance for the BRVM Composite, this equates to an annual performance of 3.85%. The BRVM 10 meanwhile, with 69.75% performance over 20 years, equates to an annual performance of 3.49%. If we consider that on the stock market the annual interest is added to the initial capital and reinvested to produce other interests, then the performance of the BRVM Composite falls to 2.9% and that of the BRVM 10 drops to 2.7%.
These performances are now lower than those of an ordinary savings account over the same period. Everyone knows that the stock market (stocks) generally gives a better return than savings accounts, SWDs, bonds over the long term.
The BRVM reached its historical peak of performance on April 22, 2016 with the BRVM Composite at 320.3 points and on July 27, 2015 for the BRVM 10 at 315.18 points. This represented a performance of 220.3% for BRVM Composite and 215.18% for BRVM 10.
Compared with these historical peaks, we now see that the BRVM Composite shrank by -44.71% and the BRVM 10 by -46.14%. A stock market index that loses more than -40% is a rare event and we have to draw the right conclusions. The current level of the BRVM is that of February 6, 2013, when the BRVM Composite was at 177.7 points and the BRVM 10 at 197.5 points. The BRVM returned to its situation about six years ago.
In my opinion, this represents a buying opportunity that does not happen often. It is thus the moment or never to buy while taking care however to invest only in actions of companies having a good financial health. This is no longer the time to sell.
Signed Candobi
