The Bourse continued to lose ground further as the ASPI decreased marginally by 23.11 points (or -0.36%) to close at 6,352.10 points, while the S&P SL20 Index also decreased by 20.59 points (or -0.55%) to close at 3,692.56 points.
JKH was the highest contributor to the week’s turnover value, contributing LKR0.97Bn or 27.47% of total turnover value.
Teejay Lanka followed suit, accounting for 10.68% of turnover (value of LKR0.38Bn) while Commercial Bank contributed LKR0.33Bn to account for 9.23% of the week’s turnover.
Total turnover value amounted to LKR3.54Bn (cf. last week’s value of LKR4.65Bn), while daily average turnover value amounted to LKR0.71Bn (-23.77% W-o-W) compared to last week’s average of LKR 0.93Bn.
Market capitalization meanwhile, decreased by 0.52% W-o-W (or LKR 15.14Bn) to LKR2,894.42Bn cf. LKR2,909.56Bn last week.
Liquidity (in value terms)
The Diversified Sector was the highest contributor to the week’s total turnover value, accounting for 36.10% (or LKR 1.28Bn) of market turnover.
Sector turnover was driven primarily by JKH & Hemas Holdings which accounted for 84.37% of the sector’s total turnover.
The Banking, Finance & Insurance Sector meanwhile accounted for 33.12% (or LKR 1.17Bn) of the total turnover value with turnover driven primarily by Commercial Bank, Amana Bank, LOLC, NDB, NTB & Sampath Bank which accounted for 82.59% of the sector turnover.
The Manufacturing Sector was also amongst the top sectorial contributors, contributing 18.01% (or LKR 0.64Bn) to the market driven by Teejay Lanka & Tokyo Cement[NV] which accounted for 72.31% of the sector turnover.
Liquidity (in volume terms)
The Banking, Finance & Insurance sector dominated the market in terms of share volume, accounting for 48.16% (or 65.27Mn shares) of total volume, with a value contribution of LKR 1.17Bn.
The Diversified Sector followed suit, adding 16.96% to total turnover volume as 22.99Mn shares were exchanged.
The sector’s volume accounted for LKR1.28Bn of total market turnover value. The Manufacturing Sector meanwhile, contributed 15.59Mn shares (or 11.51%), amounting to LKR0.64Bn.
Top gainers and losers
Blue Diamonds[NV] was the week’s highest price gainer; increasing 33.3% W-o-W from LKR0.30 to LKR0.40. Kandy Hotels gained 17.0% W-o-W to close at LKR6.20. Agalawatte (+14.5% W-o-W) and Balangoda Plantations (+13.4% W-o-W) were also amongst the gainers.
Lankem Developments was the week’s highest price loser, declining 38.1% W-o-W to close at LKR6.50 while SMB Leasing[NV](-33.3% Y-o-Y), CIT (-14.9% W-o-W) & SMB Leasing(-14.3% 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 0.07Bn relative to last week’s total net inflow of LKR 0.17Bn (-139.2% W-o-W).
Total foreign purchases decreased by 35.3% W-o-W to LKR 1.81Bn from last week’s value of LKR 2.79Bn, while total foreign sales amounted to LKR 1.87Bn relative to LKR 2.62Bn recorded last week (-28.6% W-o-W).
In terms of volume Lankem Developments & Commercial Bank led foreign purchases while Teejay Lanka & JKH led foreign sales.
In terms of value Commercial Bank & LOLC led foreign purchases while JKH & Teejay Lanka led foreign sales.
Point of view
Equities continued to lose steam this week, falling ~23 points W-o-W to hit an 8-month low of 6352.1 points as concerns over domestic political and policy uncertainty dominated sentiment and the US Fed raised interest rates for the 3rd time this year.
Since the first reading of Budget 2018 in early November, the broad-share price Index has fallen ~215 points (-3.3%) with consecutive losses in the six weeks since the Budget.
Average daily turnover levels also fell 24% W-o-W, as low market participation, particularly by Institutional and HNI investors dragged the average daily turnover for the week down to Rs.0.71Bb (cf. Rs.0.93Bn last week).
Crossings for the week accounted for just 36% of total market turnover, lower than last week’s crossings of 46% and reflecting the lower participation levels by HNI & Institutionals.
Crossings remained largely centered around mid-cap counters such as Teejay Lanka (28% of total crossings), Amana Bank (15% of total crossings) and LOLC (12% of crossings) while larger-cap blue chips such as JKH and COMB played a less dominant role as they cumulatively accounted for just 10% of total crossings.
Despite the lower daily average turnover levels, the YTD average remained at Rs. 0.94Bn, higher than the 2016 average of Rs.0.73Bn and reflecting relatively stronger equity market performance from earlier in the year.
Foreign investors however, retreated to a net selling position this week, recording net sales of Rs. 0.07Bn as the US Fed raised rates for the 3rd time this year in a widely anticipated move.
The move along with the expectation of 3 hikes in 2018 represents the continuation of the US Fed’s monetary policy normalization which could in turn impact the performance of Emerging and Frontier market equities. Markets in the week ahead are likely to remain dull ahead of the Christmas holidays.
Moody’s affirms Sri Lanka’s credit profile at B1
Moody’s Investor Services on Wednesday affirmed Sri Lanka’s credit rating at B1 while maintaining its negative outlook on the country’s credit profile.
The credit agency cited the balance between Sri Lanka's moderate institutional strength and strong (but volatile) growth against the country’s high debt burden, narrow revenue base, large government borrowing requirements and elevated external vulnerability risk as reasons for its rating outlook..
The credit agency also noted that Sri Lanka's 2016 nominal GDP was over 4x times the median for B1- and B2-rated sovereigns and that this comparatively large economy provides important diversification and shock absorption capacity, which supports Sri Lanka's credit profile at the B1 level1.
The Group noted that robust real GDP growth also drives its assessment of Sri Lanka's economic strength and that it expects real GDP growth to average about 4.9% per year in 2017-21. However, growth is expected to remain relatively volatile, particularly due to the economy’s vulnerability to droughts and flooding as the size and dispersion of seasonal monsoon rainfall influences agricultural sector growth and rural household consumption levels.
The Negative outlook meanwhile, represents its view that that persistently high government liquidity and external vulnerability risks continue to pressure Sri Lanka's credit profile, and that measures to build reserves and smooth the profile of external payments may be insufficient to contain imminent government liquidity and balance of payments pressures starting in 2019, when large international debt repayments come due and Sri Lanka's three-year IMF Extended Fund Facility (EFF) program concludes.
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