Exchange highlights 2019 achievements
SOME of the highlights of the South Pacific Stock Exchange (SPX) in 2019.
For the year 2019, the stock market reached new highs and saw various positive highlights, including; the growth in market capitalisation surpassing the $4 billion mark, substantial gains in market indices, general increase in the number of new investors seeking opportunities in the stock market, extension of SPX sectorial representation to 11 different sectors subsequent to a new listing, new corporate actions and more than 50 per cent of the listed entities ending the year at their all-time high share prices.
Overall, the year 2019 can be characterised as a period of relatively high demand for stocks which had potential for share price increases presenting capital gain opportunities, those that have been historically more liquid and stocks that had reported consistent or in some cases improved dividend payments and financial performance. Generally, the three licensed stockbroking firms are to be commended for assisting with the injection of supply of shares into the market by their respective clientele throughout the year as well as working with SPX in attracting new investors into the stock market.
The average capital growth (average increase in share prices) improved further in 2019 but given the trade off and an inverse relationship between share price movements and the dividend yield ratio, the average dividend yield percentage for the year 2019 saw a slight fall. However, considering the same on a dividend per share basis for each listed entity, it is noticeable that majority of the entities either recorded an increase or in some cases, the similar levels of dividend payment in 2019. Nonetheless, the higher average capital growth compensated for this decline yielding a higher average aggregate total market return (capital growth plus dividend yield) for the SPX listed stocks in 2019. The cumulative 12-month average total market return of 43.03 per cent in 2019 in comparison to the average total market return of 41.44 per cent in 2018 is a testimony of this trend.
It was also encouraging to note that there were certain shareholders who took an opportunity of the prevailing market sentiments to liquidate part of their shareholdings and realise capital gains from their investments.
This was a welcome sign as historically many of these investors maintained a strong “hold” and/or “accumulate” desire for listed securities. From the buyer perspective, this behaviour from certain existing investors offered them an opportunity to purchase shares in securities that were highly sought-after and scrips for which were usually unavailable.
The year 2019 was also a period during which some listed entities were seen to be more active in using the SPX platform to undertake certain corporate actions, further realising their status and embracing the many advantages of being a listed entity.
These corporate actions encouraged greater participation by shareholders and enhanced further liquidity of their shares during the year arising from activities such as share splits, private placements and options to reinvest dividend proceeds.
The SPX encourages other listed entities to take queue and explore possibilities of exercising similar corporate action activities in 2020 which may present favourable opportunities for their shareholders.