The Bourse continued to lose grounds as the ASPI decreased by 26.91 points (or 0.42%) to close at 6,409.37 points, while the S&P SL20 Index also decreased by 15.45 points (or 0.42%) to close at 3,690.57 points.
Turnover and market capitalization
Browns Capital was the highest contributor to the week’s turnover value, contributing LKR 0.57Bn or 21.76% of total turnover value.
JKH followed suit, accounting for 13.67% of turnover (value of LKR 0.36Bn) while Singer Sri Lanka contributed LKR 0.30Bn to account for 11.42% of the week’s turnover.
Total turnover value amounted to LKR 2.64Bn (cf. last week’s value of LKR 3.27Bn), while daily average turnover value amounted to LKR 0.53Bn (-19.36% W-o-W) compared to last week’s average of LKR 0.65Bn.
Market capitalization meanwhile, decreased by 0.42% W-o-W (or LKR 12.20Bn) to LKR 2,906.18Bn cf. LKR 2,918.38Bn last week.
Liquidity (in value terms)
The Diversified Sector was the highest contributor to the week’s total turnover value, accounting for 43.90% (or LKR 1.16Bn) of market turnover.
Sector turnover was driven primarily by Browns Capital, JKH, Melstacorp, CT Holdings which accounted for 91.16% of the sector’s total turnover.
The Banking ,Finance & Insurance Sector meanwhile accounted for 24.74% (or LKR 0.65Bn) of the total turnover value with turnover driven primarily by Commercial Bank, Sampath, Central Finance, LOLC which accounted for 65.48% of the sector turnover.
The Trading Sector was also amongst the top sectorial contributors, contributing 11.59% (or LKR 0.31Bn) to the market driven by Singer Sri Lanka which accounted for 98.48% of the sector turnover.
Liquidity (in volume terms)
The Diversified Sector dominated the market in terms of share volume, accounting for 76.81% (or 188.48Mn shares) of total volume, with a value contribution of LKR 1.16Bn.
The Banking, Finance & Insurance sector followed suit, adding 6.50% to total turnover volume as 15.95Mn shares were exchanged.
The sector’s volume accounted for LKR 0.65Bn of total market turnover value. The Trading Sector meanwhile, contributed 9.82Mn shares (or 4.00%), amounting to LKR 0.31Bn.
Top gainers and losers
Lankem Developments was the week’s highest price gainer; increasing 14.7% W-o-W from LKR 3.40 to LKR 3.90. Arpico gained 13.9% W-o-W to close at LKR 173.70 while Amana Takaful gained 12.5% W-o-W to close at LKR 0.90. Adam Capital (+11.1% W-o-W) and Tess Agro[NV](+10.0% W-o-W) were also amongst the gainers.
PC House was the week’s highest price losers, declining 50.0% W-o-W to close at LKR 0.10 while Ceylon Printers (19.1% Y-o-Y), Ceylon Tea Brokers (-13.3% W-o-W) & Hunas Falls (-11.0% 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 0.25Bn relative to last week’s total net inflow of LKR 0.98Bn (-74.7% W-o-W).
Total foreign purchases decreased by 43.2% W-o-W to LKR 0.99Bn from last week’s value of LKR 1.74Bn, while total foreign sales amounted to LKR 0.74Bn relative to LKR 0.76Bn recorded last week (-2.57% W-o-W).
In terms of volume, RIL Property & Commercial Credit led foreign purchases while Browns Capital & Renuka Holdings led foreign sales.
In terms of value, JKH & Commercial Bank led foreign purchases while Renuka Holdings and Aitken Spence led foreign sales.
Point of view
Share markets fell for the 6th consecutive week as uncertainty over the new tax reform bill negatively impacted market activity.
Markets lost ~54 points W-o-W during the start of the week to close at 4-month closing low on Thursday, but reversed its losing streak on Friday by adding ~27 points after the State Minister of Finance assured that the Government would exempt stock market trading from tax with no change to the current share transaction levy1.
The 1st draft of the Inland Revenue Bill proposed a 28% tax on trading stocks1. Average turnover levels however, declined over the week to amount to LKR 0.53Bn, 19% lower than last week’s average of LKR 0.65Bn and 39% lower than Y-T-D turnover levels of LKR 0.86Mn.
Crossings meanwhile, declined significantly during the week, amounting to 19% of total market turnover compared to the high 49% recorded last week.
Net foreign flows meanwhile declined to LKR 0.25Bn this week, ~75% lower than last week’s net flows of LKR 0.98Bn.
Markets in the week ahead are likely to look for signs from the Inland Revenue Bill which is expected to be passed by Parliament today.
June external sector performance improves
Sri Lanka’s External sector performance improved in June with the trade deficit contracting to $554Mn cf. $775Mn in June’16.
The improved trade balance was largely due Export earnings increasing (+9.6% Y-o-Y) for the 4th consecutive month while expenditure on imports declined (-8.0% Y-o-Y) for the 1st time since Sept’16.
Lower import expenditure was primarily due to lower imports in all major categories, especially intermediate goods which declined 12.9% Y-o-Y amid lower fuel imports (-34.1% Y-o-Y).
June performance was also aided supported by continuous inflows G-secs and equities. Nevertheless, workers’ remittances declined over June amid economic and geopolitical issues in the Middle East while tourist earnings remained largely flat as arrivals from the Middle East fell and Chinese tourist arrivals remained stagnant.
Reflecting in part the stronger performance over Jun’17, the overall B-o-P recorded a surplus of $1,563.4Mn during H1’17 relative to a deficit of $1,186.1Mn in H1’16.
The country’s gross official reserves meanwhile rose to $7.0Bn by end June 2017(amid proceeds from the ISB and syndicated loan) and the YTD LKR depreciation (against the USD) over the period was consequently 2.0%.
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