Sydbank sees 10%-15% gain for C20 Cap

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The C20 Cap index of leading Danish stocks could gain up by 15% through the coming year, as an improving economic outlook will boost prices, according to a note from Denmark’s Sydbank following a roundup of third quarter results of locally listed companies.

“An improving economic outlook together with even higher earnings of Danish companies will contribute to send Danish equities back to record levels. We see further potential of 10%-15% for the C20 Cap index in the coming 12 months. Before that investors can look forward to a strong end to the year for the Danish equity market, which has already increased by 18% this year.,” Sydbank said.

Danish companies have generally reported good numbers in the reporting season, Sydbank adds.

Businesses have been implementing efficiency and streamlining measures. And they now stand to benefit from more expansionary monetary policy by central banks in Japan, China and the eurozone. Improving US economic data and realisation among Europe’s politicians of the need for more initiatives to create growth are other factors that favour exposure to Danish equity.

That said, Danish shares have risen strongly over the past five years, which means that their valuation is relatively high. Thus investors should be selective, Sydbank said.

In terms of the results reported for the most recent quarter ended, Sydbank said that across the C20 Cap index revenue increased 7.4% on an annualised basis. The profit margin improved by 2.8% to 24.1% on an annualised basis.

 

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