In 2022, 5 out of 9 companies in the SBITOP index outperformed the index, 2 tied the index, while 2 underperformed as compared to the index, on a day-to-day basis.
Today, we decided to bring you an overview of how the SBITOP constituents performed as compared to the index as a whole, for the entire of 2022. It should be noted that this data by itself does not tell us much, as there could be days where certain companies outperformed/underperformed an index by high single-digit and even double-digit percentage points, while for the remainder of the year, they perform roughly the same or even worse compared to the index.
As the data presented here measures the daily performance of the constituents compared to the index, it should be taken together with the price changes recorded by the companies as well as the index itself. However, a company that does outperform/underperform as compared to the index it is part of, will in the long run yield higher/lower returns compared to the index, just because of the amount of time those changes are allowed to accumulate. So to start this off, let’s look at how the index as well as the constituents performed during the year.
SBITOP and its constituents’ 2022 price change (%)
Source: Bloomberg, InterCapital Research
As we can see in the graph, the SBITOP index recorded a decrease of 17% during the year. Of its member constituents, the largest decreases were recorded by Krka, at 22% followed closely by Petrol, at 21%. Next up, we have Sava Re and NLB, which declined by 20% and 18%, respectively, Telekom Slovenije at -16%, and Cinkarna Celje, at -11%. In fact, the only Company to record an increase is Luka Koper, at 2%. One should, however, also note that Slovenian companies usually pay out high dividend yields, amounting to app. 5% on the low-end to 10% on the high-end. The reasons for these decreases and an overall bad year for the companies are numerous, from the war in Ukraine and inflation, as well as increased interest rates which affect all equity markets, to more company-specific situations, such as the one with Krka (Krka’s East Europe region, which includes Russia & Ukraine, is one of the company’s largest markets, and as such, is affected by the war), and Petrol (which was affected by high oil&gas prices on one side, and margin restrictions on prices sold in Croatia and Slovenia on the other).
How much did individual constituents out/underperform the index (2022, p.p.)
Source: Bloomberg, InterCapital Research
In 2022, 252 trading days were recorded on the LJSE. During this period, 5 out of 9 companies outperformed the index in terms of daily comparisons, 2 companies matched the index, while 2 companies underperformed compared to the index. The Company that outperformed the index the most was Unior, which had higher returns 52% of the time, followed by Luka Koper at 51.2%, Cinkarna Celje and Krka, both at 50.8%, and Sava Re, at 50.4%. Petrol had the same number of days when it outperformed and underperformed as compared to the index, as did Telekom Slovenije, while Triglav outperformed the index only 49.6% of the time, and finally, NLB outperformed the index only 46% of the time.
How often did SBITOP constituents outperform the index in 2022 (%)
Source: InterCapital Research
Here we can also see the reason why taking just these data points does not make much sense. If you did, you could have said that NLB was the worst company to invest in out of all the observed companies. Even though NLB did record an 18% decrease during the year, it was still only the 4th worst performer. In fact, the worst performer during the year, Krka, at a 22% decrease, outperformed the index 50.8% of the time. This comes back to the statement made at the beginning of this overview, some days massive changes can be recorded, while other days none of them might. This can also be tied to investment strategies into these stocks in general; Day trading is quite expensive due to transaction costs, as well as the capital gains tax on any profits made. Furthermore, if it’s timed wrongly, which considering the number of days in question is bound to happen, there is an inherent higher potential for more negative returns, as compared to investing continually and consistently.
