Should investors rely on share price index forecasts?

I was pretty convinced that Renaissance Capital is a highly sought after investment firm to provide a thorough opinion of BK shares. I was also aware that such a respectable company cannot jeopardise its reputation by giving a false report.
Fred Oluoch-Ojiwah
Fred Oluoch-Ojiwah

I was pretty convinced that Renaissance Capital is a highly sought after investment firm to provide a thorough opinion of BK shares. I was also aware that such a respectable company cannot jeopardise its reputation by giving a false report.

However, I realised that certain sections of the report sounded too technical and sophisticated. To digest the contents of the report, I sought the professional opinion of Celestine Rwabukumba, the Coordinator of Rwanda Stock Exchange (RSE).

Key points came out of our interactions. Rwabukumba believes that the report should be taken as a professional opinion on research that gives an outlook on a particular stock.

The forecasts are based on certain considerations such as comparisons with BK’s peers in the region as well as other underlying factors that are likely to impact on the bank’s performance in the market.

According to the report,   BK shares have been elevated from “Hold”-meaning that if you are an investor at RSE, keep it for now and don’t sell. This status gives way to that of “Buy”, which means that if an investor yearns to buy its shares at RSE, it is highly advisable to do so now. This elevation means that BK’s share has the potential for growth in terms of price.

The Renaissance Capital report shows that listed companies have begun to understand the value of information and research as it affects the investing public.

This gives a clearer prospect on what is likely to happen to a particular stock. It thus guides decision making among the investing public as financial literacy in the country is still low. Such reports should be taken as essential guides for the 10,000 investors at the RSE and other interest groups following emerging trends at RSE including the media.

Part of the investor education that targets the general public is the need for those seeking opportunities at RSE to understand the basics of financial literacy as a key decision making tool. A case in point is what is referred to as monetary illusions that griped some investors after the onset of trading at RSE.

This refers to a situation where certain investors look at short term monetary gains at RSE as opposed to long term ones and by extension real gains from a particular listed stock.

 

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