The Bourse continued to lose ground as the ASPI decreased by 69.87 points (or -1.08%) to close at 6,413.68 points, while the S&P SL20 Index also decreased by 64.90 points (or -1.71%) to close at 3,733.10 points.
Turnover and marketcapitalization
Commercial Bank was the highest contributor to the week’s turnover value, contributing LKR 1.32 Bn or 28.07% of total turnover value.
Dialog Axiata followed suit, accounting for 18.40% of turnover (value of LKR 0.86 Bn) while JKH contributed LKR 0.40 Bn to account for 8.49% of the week’s turnover.
Total turnover value amounted to LKR 4.69 Bn (cf. last week’s value of LKR 4.62 Bn), while daily average turnover value amounted to LKR 0.94 Bn (+1.61% W-o-W) compared to last week’s average of LKR 0.92 Bn.
Market capitalization meanwhile, decreased by 0.87% W-o-W (or LKR 25.65 Bn) to LKR 2,923.50 Bn cf. LKR 2,949.15 Bn last week.
Liquidity (in value terms)
The Banking, Finance & Insurance Sector was the highest contributor to the week’s total turnover value, accounting for 41.75% (or LKR 1.96 Bn) of market turnover.
Sector turnover was driven primarily by Commercial Bank,Sampath Bank & HNB which accounted for 88.59% of the sector’s total turnover.
The Telecom Sector meanwhile accounted for 18.42% (or LKR 0.86 Bn) of the total turnover value with turnover driven primarily by Dialog Axiata which accounted for 99.89% of the sector turnover.
The Diversified Sector was also amongst the top sectorial contributors, contributing 12.19% (or LKR 0.57 Bn) to the market driven by JKH which accounted for 69.67% of the sector turnover.
Liquidity (in volume terms)
The Telecom sector dominated the market in terms of share volume, accounting for 44.85% (or 66.50 Mn shares) of total volume, with a value contribution of LKR 0.86 Bn.
The Banking,Finance & Insurance sector followed suit, adding 16.60% to total turnover volume as 24.61Mn shares were exchanged.
The sector’s volume accounted for LKR1.96Bn of total market turnover value. The Health Care Sector meanwhile, contributed 15.64Mn shares (or 10.55%), amounting to LKR 0.18 Bn.
Top gainers and losers
People’s Merchant Finance was the week’s highest price gainer; increasing 12.60% W-o-W from LKR 12.70 to LKR 14.30. Bimputh Finance gained 10.1% W-o-W to close at LKR 38.00.
Carsons (+9.4% W-o-W) and Renuka Foods (+9.4% W-o-W) were also amongst the gainers.
Adam Inv. was the week’s highest price loser, declining 25.00% W-o-W to close at LKR0.30 while Kelsey Developments (-20.8% Y-o-Y), Selinsing (-19.7% W-o-W) & Paragon (-17.2% W-o-W) were also amongst the top losers over the week.
Foreign investors closed the week in a net selling position with total net outflows amounting to LKR 1.21Bn relative to last week’s total net inflow of LKR 1.41 Bn (-185.8% W-o-W).
Total foreign purchases decreased by 33.7% W-o-W to LKR 1.99 Bn from last week’s value of LKR 2.99 Bn, while total foreign sales amounted to LKR 3.20 Bn relative to LKR 1.58Bn recorded last week (-102.51% W-o-W).
In terms of volume, Melstacorp & Renuka Foods led foreign purchases while Commercial Bank & Access Engineering led foreign sales.
In terms of value Sampath Bank & Melstacorp led foreign purchases while Commercial Bank & Cargills led foreign sales.
Point of view
Equity markets continued to lose steam, losing 69 points yet again this week as investors opted to remain on the sidelines amid expectations of amendments to the Budget.
Since the presentation of the 2018 Budget 3-weeks ago, markets have lost a cumulative 208 points, with the ASPI wiping off 69 points in each of the subsequent 3-weeks since the 1st reading of the Budget.
Turnover levels meanwhile, remained broadly unchanged from last week with average daily turnover totaling LKR 0.94 Bn relative to LKR 0.92 Bn last week. Lower retail and institutional participation accounted for the lower turnover levels, with lower institutional and HNI participation in particular resulting in lower activity.
Crossings over the week accounted for just 36% of total market turnover in contrast to the last five weeks when crossings have averaged 50% of total market turnover levels.
Net foreign flows to the CSE meanwhile reverted to a net selling this position as net sales of LKR 1.34 Bn on Thursday and Friday offset the net buying of LKR 0.13 Bn at the start of the week.
Nevertheless, the net selling position on the Bourse was ~46% lower than that of two-weeks ago when net sales for the week totaled LKR 2.2 Bn (cf.LKR 1.2 Bn this week). YTD net foreign inflows to the CSE meanwhile totaled LKR 17.6 Bn by end-week, the highest net buying since 2014 when net buying totaled LKR 21 Bn.
Growing foreign interest in the market has contributed to a 30% improvement in the Daily Average Turnover YTD (LKR .95Bn cf. LKR.73Bn in 2016). Markets in the week ahead are likely to consolidate at the current levels.
S&P revises up Sri Lanka’s credit outlook to stable
S&P Global Ratings revised its credit outlook on Sri Lanka to Stable from Negative citing expectations the country would maintain its reform momentum over the next 12 months while smoothing its higher debt repayments especially in 2019.
The ratings agency also affirmed its ‘B+’ long-term and ‘B’ short-term sovereign credit ratings on the country. S&P cautioned however, that downward pressure on the rating could occur in the event of a more fractious political environment which could derail legislative reform particularly its liability management reform.
The Group also noted that although a higher rating is unlikely in the next 12 months, a significant improvement in the country’s external and fiscal indicators along with a substantive improvement in Sri Lanka’s institutional settings could result in upward pressure on the ratings.
S&P also noted that Sri Lanka’s growth outlook remains robust and expects the country to record a 4.9% real GDP growth rate over 2017-2020. According to S&P, GDP growth will be underpinned by rising tourist arrivals, a uniquely specialized garment sector, strong potential in business process outsourcing, and moderate inflation but stronger growth would require improved institutional settings and a recovery in export markets.
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