The Bourse ended the week on a positive note as the ASPI increased by 53.09 points (or +0.86%) to close at 6,191.17 points, while the S&P SL20 Index also increased by 65.61 points (or +1.97%) to close at 3,400.43 points.
Turnover and market capitalization
JKH was the highest contributor to the week’s turnover value, contributing LKR 0.52Bn or 24.14% of total turnover value.
Hemas Holdings followed suit, accounting for 12.16% of turnover (value of LKR 0.26Bn) while Melstacorp contributed LKR 0.21Bn to account for 9.73% of the week’s turnover.
Total turnover value amounted to LKR 2.14Bn (cf. last week’s value of LKR 1.97Bn), while daily average turnover value amounted to LKR 0.43Bn (+8.80% W-o-W) compared to last week’s average of LKR 0.39Bn.
Market capitalization meanwhile, increased by 1.09% W-o-W (or LKR 31.18Bn) to LKR 2,899.15Bn cf. LKR 2,867.97Bn last week.
Liquidity (in value terms)
The Diversified sector was the highest contributor to the week’s total turnover value, accounting for 49.38% (or LKR 1.06Bn) of market turnover.
Sector turnover was driven primarily by JKH, Hemas Holdings & Melstacorp which accounted for 93.22% of the sector’s total turnover. The Banks, Finance & Insurance sector meanwhile accounted for 26.81% (or LKR 0.58Bn) of the total turnover value, with turnover driven primarily by Commercial Bank, Sampath Bank, Amana Takaful & DFCC Bank which accounted for 62.71% of the sector turnover.
The Manufacturing sector was also amongst the top sectorial contributors, contributing 8.06% (or LKR 0.17Bn) to the market driven by Teejay Lanka which accounted for 43.58% of the sector turnover.
Liquidity (in volume terms)
The Banks, Finance & Insurance Sector dominated the market in terms of share volume, accounting for 60.83% (or 103.25Mn shares) of total volume, with a value contribution of LKR 0.58Bn.
The diversified sector followed suit, adding 16.56% to total turnover volume as 28.10Mn shares were exchanged.
The sector’s volume accounted for LKR 1.06Bn of total market turnover value. The Plantations sector meanwhile, contributed 12.40Mn shares (or 7.31%), amounting to LKR 0.09Bn.
Top gainers and losers
Amana Takaful was the week’s highest price gainer; increasing 28.6% W-o-W from LKR0.70 to LKR0.90. Adam Capital gained 20.0% W-o-W to close at LKR0.60. Lotus Hydro (+14.6% W-o-W) and Paragon (+14.3% W-o-W) shares were also amongst the top gainers.
Adam Investments was the week’s highest price loser; declining 33.3% W-o-W to close at LKR0.20 while SMB Leasing[NV] (-33.3% W-o-W), Ceylon Printers(-16.6% W-o-W) and Blue Diamonds(-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 outflow amounting to LKR 0.10Bn relative to last week’s total net outflow of LKR 0.22Bn (+52.76% W-o-W).
Total foreign purchases increased by 35.26% W-o-W to LKR 0.91Bn from last week’s value of LKR 0.68Bn, while total foreign sales amounted to LKR 1.02Bn relative to LKR 0.90Bn recorded last week (+13.54% W-o-W).
In terms of volume Teejay Lanka & People’s Insurance led foreign purchases while Sierra Cables & Lankem Developments led foreign sales.
In terms of value Teejay Lanka & Lion Brewery led foreign purchases while Hemas Holdings & Sampath Bank led foreign sales.
Point of View
Bargain-hunting on blue-chips and select mid-caps sustained positive market momentum for the 2nd consecutive week, helping the broad-share Index gain almost 1% this week.
The ASPI gained ~53 points (0.9% W-o-W) relative to last week’s 29.4 point (0.5%) gain, helping the Index close just 8-points shy of the 6200-mark and maintaining last week’s positive momentum after almost 2-months of consistent declines.
Strong buying interest in blue chips JKH and HNB contributed to ~23 index points (of the 53 index point gain) while interest in other key stocks such as SAMP, NEST, COMB, DIST, DIAL, AEL, TJL and CINS also contributed notably to the week’s gains.
Market momentum was driven primarily by retail and HNI investors, with institutional investors remaining on the sidelines this week. Crossings over the week accounted for just 20% of the markets total turnover of Rs. 2.1Bn, down from last week’s participation level of 46% and lower than the average YTD participation level of 42%.
Despite the lower participation levels of the local institutional investors, daily average turnover for the week rose 8.8% W-o-W to Rs. 0.42Bn, up from last week’s daily average turnover of Rs.0.39Bn.
Despite the gains on the Index, the foreign equity sell-off on domestic equities continued for the 6th consecutive week, reflecting the decline in global risk-appetite for risky EM/FM assets and commodities amid heightened US-China trade tensions, the cooling Chinese economy, foreign currency volatility and tightening global market liquidity.
Net outflows from the CSE consequently amounted to Rs.104Mn, and although an overall negative position, the outflows were lower than that of the net outflows of Rs. 221Mn last week and Rs.900Mn the week prior.
June quarter corporate earnings releases (which have just begun) are likely to influence market direction in the week ahead.
Oil falls as supplies and trade tensions rise
Global oil prices continued to slide this week, with benchmark Brent crude oil recording a 5% loss to hit a 3-month low of $71.84/bbl on Monday.
Commodity prices have being on a declining trend since early-July, with Brent crude recording its biggest one-day fall in 2 years last week (-6.9%) amid shifting perceptions in the oil market.
Commodity prices which have been on a consistent uptrend since June’17, hit a 31/2 year high of $79.8/bbl in mid-May 2018 amid ongoing fears of supply shortages due to OPEC-led production cuts and prospects of US-sanctions on the world’s 5th largest oil producer Iran. Despite trading at these highs over the last 2 months, oil markets have taken an about-turn since early-July, with prices falling by ~7.3% over the last 2-weeks as the focus in oil markets has shifted away from supply shortages and towards increasing production and the US-China trade dispute.
Concerns over supply disruptions eased as expectations of supply increased amid improved oil exports from OPEC and Russia and as Libya re-opened its export terminals.
Rising concerns over the potential damage to global growth from the escalating U.S.-China trade dispute meanwhile raised concerns about oil demand and heightened selling pressure on oil.
Indeed, in its latest outlook for global growth the IMF strongly cautioned against the rising trade tensions, adding that although it retains its global growth forecast of 3.9% in 2018 &2019, the expansion is becoming less even, with risks to the outlook mounting.
The IMF added that downside risks have heightened as escalating and sustained trade actions could derail the recovery and depress medium-term growth both through their direct impact on resource allocation and productivity and by raising uncertainty and taking a toll on investment1.
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