The Bourse ended on a negative note this week as the ASPI decreased by 9.91 points (or -0.15%) to close at 6,531.06 points, while the S&P SL20 Index also decreased by 19.13 points (or -0.52%) to close at 3,660.10 points.
Turnover and market capitalization
Sampath Bank was the highest contributor to the week’s turnover value, contributing LKR0.89Bn or 28.54% of total turnover value.
JKH followed suit, accounting for 23.39% of turnover (value of LKR0.73Bn) while Commercial Bank contributed LKR0.15Bn to account for 4.89% of the week’s turnover.
Total turnover value amounted to LKR3.12Bn (cf. last week’s value of LKR1.29Bn), while daily average turnover value amounted to LKR0.62Bn (+141.06% W-o-W) compared to last week’s average of LKR 0.26Bn.
Market capitalization meanwhile, decreased by 0.15% W-o-W (or LKR 4.57Bn) to LKR 3,049.25Bn cf. LKR 3,053.82Bn last week.
Liquidity (in value terms)
The Banking, Finance & Insurance Sector was the highest contributor to the week’s total turnover value, accounting for 49.93% (or LKR 1.56Bn) of market turnover.
Sector turnover was driven primarily by Sampath Bank, Commercial Bank, HNB, Ceylinco Insurance, Union Bank & Sanasa Development Bank which accounted for 87.76% of the sector’s total turnover.
The Diversified Sector meanwhile accounted for 35.00% (or LKR 1.09Bn) of the total turnover value, with turnover driven primarily by JKH, Melstacorp & Softlogic Holdings which accounted for 85.10% of the sector turnover.
The Manufacturing Sector was also amongst the top sectorial contributors, contributing 4.77% (or LKR 0.15Bn) to the market driven by Chevron which accounted for 58.16% of the sector turnover.
Liquidity (in volume terms)
The Diversified Sector dominated the market in terms of share volume, accounting for 42.49% (or 32.91Mn shares) of total volume, with a value contribution of LKR 1.09Bn.
The Banks, Finance & Insurance Sector followed suit, adding 22.62% to total turnover volume as 17.52Mn shares were exchanged.
The sector’s volume accounted for LKR1.56Bn of total market turnover value. The Power & Energy Sector meanwhile, contributed 6.38Mn shares (or 8.24%), amounting to LKR0.07Bn.
Top gainers and losers
SMB Leasing was the week’s highest price gainer; increasing 20.0% W-o-W from LKR0.50 to LKR0.60. Colombo Trust gained 14.6% W-o-W to close at LKR37.00. Arpico(+13.1% W-o-W) and Office Equipment(+12.2% W-o-W) were also amongst the gainers.
SMB Leasing[NV] was the week’s highest price loser, declining 33.3% W-o-W to close at LKR0.20 while Blue Diamonds(-20.0% W-o-W), Lake House(-17.9% W-o-W), Tea Smallholder(-14.7% 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 0.34Bn relative to last week’s total net inflow of LKR 0.08Bn (+339.07% W-o-W).
Total foreign purchases increased by 520.44% W-o-W to LKR 1.20Bn from last week’s value of LKR 0.19Bn, while total foreign sales amounted to LKR 0.86Bn relative to LKR 0.12Bn recorded last week (+642.01% W-o-W).
In terms of volume Sampath Bank & Nation Lanka led foreign purchases while Dialog & Chevron Lubricants led foreign sales.
In terms of value Sampath Bank & Cargills led foreign purchases while Chevron & HNB led foreign sales.
Point of view
Sri Lankan Equity markets ended the week on a negative note, reversing the positive momentum that dominated in the previous two weeks when the broad share ASPI surpassed the 6500 mark for the first time since Mid-March.
Although market activity returned to normal levels this week as investors returned to markets post the Traditional New Year holidays, the benchmark Index ended the week at 6531.06 to record an ~10 point loss W-o-W.
Despite the overall market ending on a negative note, investors remained interested in blue chip stocks over the week, helping JKH gain ~2.8% W-o-W while Dialog gained ~2.2% W-o-W.
JKH consequently accounted for ~23.4% of this week’s total turnover. Activity levels also improved this week, helping turnover hit a 3 week high of Rs.3.1Bn (cf. Rs1.3Bn last week), and pushing the daily average turnover up by ~141% W-o-W (Rs.0.62Bn cf. Rs.26Bn).
Market activity however was dominated by retail investors as Local institutional and HNI investors opted to remain on the sidelines yet again.
Local Institutional and HNI participation accounted for just ~32% (of total market turnover) during the week cf. the average of ~47% year to date. Foreign investors meanwhile, showed interest in Sri Lankan equities, helping the Bourse record a net foreign inflow of Rs.0.3Bn cf. a net foreign inflow of Rs.0.1Bn of last week.
However, higher exchange rate volatility & rupee depreciation (~LKR depreciated 2.6% year to date) in the last few weeks has remained a concern for foreign investors, and the YTD net foreign outflow amounted to Rs.0.9Bn (including LOLC’s transaction for Rs.12.8Bn).
Markets in the week ahead are likely to move in line with developments on the political and economic front.
CB forecasts inflation to stabilize at 4.0%
National inflation levels in Mar’18 fell to a 2-year low of 2.8% Y-o-Y, down from the 4.2% Y-o-Y recorded in Feb’18.
The decline in headline inflation was driven largely by the general reduction in Food inflation (from 3.7% Y-o-Y in Feb’18 to 2.6% Y-o-Y in Mar’18) while Nonfood inflation increased marginally (from 2.8% Y-o-Y in Feb’18 to 2.9% Y-o-Y in Mar’18).
Urban inflation levels meanwhile, continued to drop in 2018 as CCPI dipped to 4.2% Y-o-Y in Mar’2018 from 7.1% Y-oY in Dec’2017, while core inflation also reduced to 3.4% Y-o-Y in Mar’18 from 4.3% Y-o-Y in Dec’17.
Lower national and urban inflation levels in 2018 (cf. Annual average 7.7% in 2017) allowed the CBSL to reduce the interest rates by 25bps at its 2nd monetary policy review for the year.
Despite the expected fuel price revision in the year, the CBSL projected urban inflation in 2018 stabilizing at 4.0%, and ~5.0% in the medium term (2019-2022). Meanwhile, the LKR experienced higher volatility this month due to greater importer dollar demand, with the LKR depreciating ~1.1% in this month so-far cf. ~0.5% in Mar’18 and ~0.7% in Feb’18.
The CBSL was quick to re-assure markets however, with the CBSL Governor stating that the recent FX market volatility is unwarranted as the country’s foreign reserve position remains positive, with FX reserves currently touching a record USD 10Bn as the government has just closed bids on USD 1Bn loan while the USD 0.6Bn final tranche from the Hambantota port lease is also expected (1).
So far this year, the LKR has depreciated ~2.6% against the USD, compared to a total depreciation of 2.3% during 2017.
0 comments: