The Bourse ended in negative territory this week as the ASPI decreased by 16.52 points (or 0.27%) to close at 6,084.99 points, while the S&P SL20 Index too decreased by 28.19 points (or 0.80%) to close at 3,496.58 points.
Turnover and market capitalisation
JKH was the highest contributor to the week’s turnover value, contributing LKR 0.585Bn or 14.99% of total turnover value. Melstacorp followed suit, accounting for 14.86% of turnover (value of LKR 0.580Bn) while NDB contributed LKR 0.39Bn to account for 10.09% of the week’s turnover.
Total turnover value amounted to LKR 3.90Bn (cf. last week’s value of LKR 6.13Bn), while daily average turnover value amounted to LKR 0.78Bn (-36.35% W-o-W) compared to last week’s average of LKR 1.23Bn.
Market capitalization meanwhile, decreased by 0.27% W-o-W (or LKR 7.25Bn) to LKR 2,672.12Bn cf. LKR 2,679.37Bn last week.
Liquidity (in value terms)
The Diversified Sector was the highest contributor to the week’s total turnover value, accounting for 36.53% (or LKR 1.43Bn) of market turnover.
Sector turnover was driven primarily by JKH, Melstacorp & Hemas Holdings which accounted for 93.05% of the sector’s total turnover.
The Bank, Finance & Insurance Sector meanwhile accounted for 27.66% (or LKR 1.08Bn) of the total turnover value with turnover driven primarily by NDB, Commercial and Sampath Banks which accounted for 79.46% sector turnover.
The Beverage, Food & Tobacco Sector was also amongst the top sectorial contributors, contributing 9.54% (or LKR 0.37Bn) to the market. The sector turnover was driven by Cold Stores which accounted for 77.38% of the sector turnover.
Liquidity (in volume terms)
The Diversified Sector dominated the market in terms of share volume too, accounting for 25.71% (or 24.05Mn shares) of total volume, with a value contribution of LKR 1.43Bn.
The Bank, Finance & Insurance sector followed suit, adding 22.24% to total turnover volume as 20.80Mn shares were exchanged.
The sector’s volume accounted for LKR 1.08Bn of total market turnover value. The Telecommunication Sector meanwhile, contributed 15.93Mn shares (or 17.03%), amounting to LKR 0.18Bn.
Top gainers and losers
Kotmale Holdings was the week’s highest price gainer; increasing 22.46% W-o-W from LKR 60.10 to LKR 73.60.
Mullers gained 20.00% W-o-W to close at LKR 1.20 while E.B. Creasy gained 18.29% W-o-W to close at LKR 1447.90. Serendib Hotels [X] (+17.06% W-o-W) and CIFL (+14.29% W-o-W) were also amongst the gainers.
Blue Diamonds [X] was the week’s highest price loser, declining 25.00% W-o-W to close at LKR 0.30. Lankem Dev (-20.69% W-o-W), Ceylon Printers (-18.03% W-o-W) and Commercial Leasing & Fin (-16.67% W-o-W) were also amongst the top losers over the week.
Foreign investors closed the week in a net buying position with total net inflows amounting to LKR 1.16Bn relative to last week’s total net inflow of LKR 1.10Bn (+5.38% W-o-W).
Total foreign purchases decreased by 12.72% W-o-W to LKR 2.50Bn from last week’s value of LKR 2.86Bn, while total foreign sales amounted to LKR 1.34Bn relative to LKR 1.77Bn recorded last week (-23.97% W-o-W).
In terms of volume, Dialog Axiata and Expolanka Holdings led foreign purchases while Teejay Lanka & Peoples Leasing led foreign sales.
In terms of value, Commercial Bank & Melstacorp led foreign purchases while Teejay Lanka & Chevron foreign sales.
Point of view
Institutional and HNI interest continued to drive markets this week, as crossings in Blue-chips, Diversifieds and mid-caps accounted for ~52% of market turnover. Although lower than last week’s ~72%, the proportion remains higher than the typical weekly average of ~35-40%.
Investor interest was driven predominantly by JKH (25% of crossings), Melstacorp (24% of crossings), NDB (16% of crossings), Dialog (7% of crossings) and mid-caps such as CCS (8% of crossings), RHL (7%) and LION (3% of crossings).
Foreign inflows to equities which have been consistent since early Feb and which have gathered pace since late Feb also drove market activity over the week, helping ease losses on the Index.
Despite the interest from HNI, Institutional and Foreign Investors though, the benchmark price Index fell steadily over the week, falling below the 6100-mark for the first time in a month.
Nevertheless the pace of decline eased over the week as positive earnings along with the IMF’s review and S&P’s credit ratings impacted sentiment. In its latest meeting to review its economic reform program with Sri Lanka, the IMF commended the authorities for meeting the December fiscal quantitative targets and for progress in improving revenue collection and automating revenue administration.
The Group noted though that the country’s net international reserves were short of the target as some of the structural reforms were lagging behind original timelines.
S&P meanwhile, affirmed Sri Lanka’s B+/B’ ratings while maintaining its negative outlook due to the country’s vulnerability to external shocks amid high external debt and low FX reserves.
Markets in the week ahead are likely to remain largely driven by Institutional and HNI investors as Retailers continue to adopt a watchful stance.
Cumulative 9m earnings rise 20% Y-o-Y
Market earnings over the December 2016 quarter rebounded strongly, helping push the trailing 12-month earnings of the market up by 24% Y-o-Y.
Total corporate earnings1 for the quarter rose 28% Q-o-Q and 34% Y-o-Y to Rs. 74Bn (cf. Rs. 58Bn in Sep’16 and Rs. 48Bn in Jun’16 quarter) driven mainly by Telcos which recovered from large FX losses and Banks & Finance and Diversifieds which benefitted from strong earnings performance in JKH and VONE.
From a cumulative 9-month2 perspective meanwhile, total market earnings rose to Rs. 177Bn, up 20% Y-o-Y from the Rs. 147Bn recorded a year ago. Robust earnings growth stemmed from sectors such as Telecom, Banks & Finance and Manufacturing although sectors such as Beverage, Food & Tobacco and Construction recorded losses over the period. Corporate earnings over the quarter reflect the mixed macroeconomic performance in H2’16; performance over the period has been mixed as the gradual improvement in growth has been accompanied by an uptick in inflation due to the drought impact and higher consumption-based tax increases (ie: VAT).
Nevertheless, the stronger earnings performance over the quarter helped push the market PER lower to 12.5x relative to 14.1x in the comparable period in 2015 and lower than the average PER levels of both its Frontier Market Peers (MSCI FM Index PER : 14.4x) and Emerging market peers (MSCI EM Index PER: 15.5x).
The ASPI has however, under-performed its peers over 2017, declining 1.7% YTD3relative to the MSCI EM (+7.1% YTD) and MSCI FM (+5.4% YTD).
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