The Bourse moved to the red as the ASPI decreased by 41.11 points (or -0.63%) to close at 6,473.62 points, while the S&P SL20 Index also decreased by 16.73 points (or -0.44%) to close at 3,767.20 points.
Turnover and market capitalization
JKH was the highest contributor to the week’s turnover value, contributing LKR1.01Bn or 24.28% of total turnover value.
Commercial Bank followed suit, accounting for 18.73% of turnover (value of LKR0.78Bn) while Ceylon Tea Brokers contributed LKR0.40Bn to account for 9.63% of the week’s turnover.
Total turnover value amounted to LKR4.16Bn (cf. last week’s value of LKR3.69Bn), while daily average turnover value amounted to LKR0.83Bn (-9.77% W-o-W) compared to last week’s average of LKR 0.92Bn.
Market capitalization meanwhile, decreased by 0.44% W-o-W (or LKR 12.99Bn) to LKR 2,960.11Bn cf. LKR 2,973.11Bn last week.
Liquidity (in value terms)
The Banking, Finance & Insurance Sector was the highest contributor to the week’s total turnover value, accounting for 35.47% (or LKR 1.47Bn) of market turnover. Sector turnover was driven primarily by Commercial Bank, Sampath Bank & Central Finance which accounted for 79.93% of the sector’s total turnover.
The Diversified Sector meanwhile accounted for 30.49% (or LKR 1.27Bn) of the total turnover value with turnover driven primarily by JKH & Melstacorp which accounted for 94.32% of the sector turnover.
The Services Sector was also amongst the top sectorial contributors, contributing 9.71% (or LKR 0.40Bn) to the market driven by Ceylon Tea Brokers which accounted for 99.18% of the sector turnover.
Liquidity (in volume terms)
The Services sector dominated the market in terms of share volume, accounting for 52.82% (or 93.52Mn shares) of total volume, with a value contribution of LKR 0.40Bn.
The Banking, Finance & Insurance Sector followed suit, adding 15.45% to total turnover volume as 27.35Mn shares were exchanged.
The sector’s volume accounted for LKR1.47Bn of total market turnover value. The Diversified Sector meanwhile, contributed 15.45Mn shares (or 8.73%), amounting to LKR1.27Bn.
Top gainers and losers
Merc Shipping was the week’s highest price gainer; increasing 16.0% W-o-W from LKR 52.00 to LKR 60.30. Convenience Food gained 15.4% W-o-W to close at LKR375.00. Nation Lanka(+8.3% W-o-W) and Softlogic Finance (+7.8% W-o-W) were also amongst the gainers.
SMB Leasing[NV] finance was the week’s highest price loser, declining 33.3% W-o-W to close at LKR0.20 while Blue Diamond[NV] (-25.0% Y-o-Y), SMB Leasing (-16.7% W-o-W) & Agalawatte(-15.4% 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 0.36Bn relative to last week’s total net inflow of LKR 1.97Bn (-81.76% W-o-W).
Total foreign purchases increased by 0.39% W-o-W to LKR 2.60Bn from last week’s value of LKR 2.59Bn, while total foreign sales amounted to LKR 2.24Bn relative to LKR 0.62Bn recorded last week (+259.95% W-o-W). In terms of volume JKH & ACL led foreign purchases while Dialog Axiata & Teejay Lanka led foreign sales. In terms of value JKH & Central Finance led foreign purchases while Dialog Axiata & Teejay Lanka led foreign sales.
Point of view
Profit-taking dominated equity markets this week, with the broad-share market index wiping off ~41 points off its 191 point gain over the last two weeks.
The ASPI hit the key psychological mark of 6500 for the 1st time in 2 months last week, prompting investors to take profits and helping the Index consolidate at the current levels.
The benchmark ASPI consequently dropped below the key 6500-mark on Thursday to close the week at 6473 points.
Market activity levels meanwhile remained broadly unchanged from last week, with average daily turnover at Rs. 0.83Bn this week cf. Rs. 0.92Bn last week and Rs. 0.30Bn in the last two weeks of December.
Market activity levels were propped largely by strong HNI and institutional participation, which accounted for ~60% of total market turnover for the second consecutive week.
Investor interest in blue-chips continued to dominate crossings, with JKH accounting for 30% of total crossings while COMB accounted for 28% of total crossings for the week. Foreign inflows to the Colombo Bourse meanwhile slowed somewhat this week, declining ~82% from last week’s notable net inflow of Rs.2.0Bn.
Nevertheless, the steady foreign interest in domestic stocks has helped the net inflows in just the 1st two weeks of 2018 hit ~13% of the 2017 total of Rs. 17.7Bn. The net inflows of Rs. 2.3Bn in Jan’18 contrast sharply to the net outflows to Rs. 1.6Bn recorded in Jan’17. Average net monthly foreign inflows to the CSE in 2017 was Rs. 1.5Bn, up from the average net monthly foreign inflow to Rs. 0.03Bn in 2016, and indicating the stronger interest in domestic equities on the back of the global rally in EM/FM risky assets.
Markets in the holiday-shortened trading week ahead are likely to consolidate at the current levels, although some further profit taking is also likely.
Foreign holdingsof G-sec holdingsfall marginally
Foreign holdings of G-sec holdings at the start of 2018 fell marginally to $2.09Bn, down 1.8% from the 2017 close of $2.13Bn.
Foreign holdings of G-sec holdings have recovered gradually since Mar’17, helped largely by the general recovery in global risk appetite for Debt in EM/FM markets over 2017.
Greater stability in the domestic economy also aided demand, helping push up foreign holdings of G-Secs from a 3-year low of $1.29Bn in Mar’17 when the US Fed raised rates for the 3rd time in a decade and the CBSL initiated its only policy rate increase for the year (to $2.13Bn by Dec’17).
The CBSL meanwhile, detailed measures it has taken thus far to make bond markets more transparent and accountable, adding that it would study the report of the Commission of Inquiry to Investigate, Inquire and Report on the Issuance of Treasury Bonds (COI) during Feb’15-Mar’16 to initiate further action if necessary.
The Monetary Authority added that most of the measures recommended in the report have already been implemented while measures have already been initiated to implement most of the report’s other recommendations.
The CBSL added that legislative amendments such as the new Liability Management Act (which will give flexibility for active debt management initiatives while minimizing rollover risk of the underlying debt stock by altering the maturity profile of the outstanding debt stock) is expected to come into force in early 2018.
The CBSL also outlined measures taken/being taken to increase the efficiency and transparency of debt management operations and improve the transparency and governance of the Investment Decision Making Process and internal control framework of the EPF.
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