The Bourse ended the week on a mixed note as the ASPI increased by 10.98 points (or 0.17%) to close at 6,438.24 points, while the S&P SL20 Index decreased by 4.18 points (or 0.11%) to close at 3,687.97 points.
Turnover and market capitalization
JKH was the highest contributor to the week’s turnover value, contributing LKR 0.47Bn or 12.98% of total turnover value. Ceylon Cold Stores followed suit, accounting for 7.89% of turnover (value of LKR 0.29Bn) while Sampath Bank contributed LKR 0.26Bn to account for 7.07% of the week’s turnover.
Total turnover value amounted to LKR 3.65Bn (cf. last week’s value of LKR 4.44Bn), while daily average turnover value amounted to LKR 0.73Bn (-17.82% W-o-W) compared to last week’s average of LKR 0.89Bn. Market capitalization meanwhile, increased by 0.17% W-o-W (or LKR 4.99Bn) to LKR 2,919.70Bn cf. LKR 2,914.71Bn last week.
Liquidity (in value terms)
The Diversified Sector was the highest contributor to the week’s total turnover value, accounting for 22.02% (or LKR 0.80Bn) of market turnover. Sector turnover was driven primarily by JKH, Hemas Holdings & Richard Peiris which accounted for 89.82% of the sector’s total turnover.
The Banking ,Finance & Insurance Sector meanwhile accounted for 21.05% (or LKR 0.77Bn) of the total turnover value with turnover driven primarily by Sampath Bank & Commercial Bank which accounted for 54.70% of the sector turnover.
The Beverage, Food & Tobacco Sector was also amongst the top sectorial contributors, contributing 13.45% (or LKR 0.49Bn) to the market driven by Cold Stores & Lion Brewery which accounted for 84.25% of the sector turnover.
Liquidity (in volume terms)
The Diversified Sector dominated the market in terms of share volume, accounting for 18.62% (or 31.73Mn shares) of total volume, with a value contribution of LKR 0.80Bn.
The Plantations sector followed suit, adding 13.70% to total turnover volume as 23.34Mn shares were exchanged.
The sector’s volume accounted for LKR 0.25Bn of total market turnover value. The Telecom Sector meanwhile, contributed 20.12Mn shares (or 11.81%), amounting to LKR 0.24Bn.
Top gainers and losers
Malwatte[NV] was the week’s highest price gainer; increasing 64.5% W-o-W from LKR 6.20 to LKR 10.20. Malwatte gained 43.8% W-o-W to close at LKR 10.50 while Ceylon Tea Brokers gained 40.5% W-o-W to close at LKR 5.20. Lankem Developments (+32.5% W-o-W) and Morrisons(+25.0% W-o-W) were also amongst the gainers.
Union Chemicals was the week’s highest price losers, declining 22.0% W-o-W to close at LKR 390.00 while Adam Investments (-20.0% Y-o-Y), Hunas Falls (-17.4% W-o-W) & Samson International(-15.1% 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 0.27Bn relative to last week’s total net inflow of LKR 0.87Bn (-68.7% W-o-W).
Total foreign purchases decreased by 48.6% W-o-W to LKR 1.50Bn from last week’s value of LKR 2.91Bn, while total foreign sales amounted to LKR 1.22Bn relative to LKR 2.04Bn recorded last week (-40.06% W-o-W).
In terms of volume, Dialog & Access Engineering led foreign purchases while Singer Sri Lanka & Tokyo Cement[X] led foreign sales. In terms of value, Lion Brewery and JKH led foreign purchases while Singer Sri Lanka & Hemas Holdings led foreign sales.
Point of view
Domestic equities continued its relatively positive momentum for the 3rd consecutive week, gaining ~10 points W-o-W as the Central Bank held policy rates steady for the 4th time this year (since its policy rate hike in Mar’17).
Despite a 15 point loss on the Index early in the week, the benchmark ASPI recovered ~26 points over the remainder of the week to close at 6430-levels. Greater certainty since Parliament passed the new inland revenue bill in early September has helped equity markets rebound marginally, with the Index gaining ~1.2% (~76 points) since September 7th when the bill was passed.
The monthly return on the Index has consequently been positive in September, with the Index gaining 0.74% over the month relative to the losses of 3.7% recorded in August and loss of 1.6% recorded in July.
Despite the relatively positive index performance, market activity remained largely dull over the week, with average daily turnover levels falling to Rs.0.73Bn over the week, down ~18% from last week although crossings continued to account for 24% of total market turnover yet again this week.
Average daily turnover levels for the year have been Rs. 0.91Bn, and Rs,0.86Bn when excluding the significant transaction in Singer when Hayley’s acquisition of a 61.7% stake in Singer helped push up daily average turnover to Rs. 11Bn (the highest since Dec 2016).
Foreign investors meanwhile continued to remain net equity buyers over the week albeit at a lower Rs. 0.27Bn (cf. Rs. 0.87Bn last week). Markets in the week ahead are likely to remain largely flat as sentiment and activity remains broadly similar to that of this week.
External sector continues to improve in July
The Central Bank on Tuesday held rates steady for the 4th consecutive time this year, citing expectations that inflation levels will moderate over the remainder of the year while private credit growth would moderate amid the prevailing high nominal and real interest rates in domestic markets.
The CBSL was also positive on the country’s external front, adding that the increased flexibility in the determination of the exchange rate has eased pressure in the domestic FX markets and resulted in a cumulative depreciation (till Sept 22) of 2% (against the USD) cf. the 3.8% depreciation recorded in 2016. Sri Lanka’s external sector continued to improve in July, amid increased exports and inflows to the financial account.
Despite the trade deficit widening over the month, export earnings rose for the 5th consecutive month. Inflows to the financial account meanwhile continued to strengthen amid net inflows to the G-sec, long term loans to the government, continued portfolio investment inflows to the CSE and receipt of the 3rd tranche of the IMF EFF facility. Consequently.
The country’s Balance-of-Payments during the first seven months of 2017, recorded a surplus of $1,448.5Mn compared to a surplus of $356.0Mn recorded in the corresponding period of 2016. Sri Lanka’s gross official reserves as at end July 2017 meanwhile, amounted to $6.7Bn, equivalent to 3.9 months of imports, while total foreign assets amounted to $9.0Bn which is equivalent to 5.3 months of imports.
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