The Bourse ended the week on a negative note as the ASPI decreased by 85.92 points (or -1.39%) to close at 6,108.71 points, while the S&P SL20 Index also decreased by 65.36 points (or -1.93%) to close at 3,323.52 points.
Turnover and market capitalization
JKH was the highest contributor to the week’s turnover value, contributing LKR 0.71Bn or 25.09% of total turnover value. Commercial Bank followed suit, accounting for 16.08% of turnover (value of LKR 0.46Bn) while Melstacorp contributed LKR 0.32Bn to account for 11.19% of the week’s turnover.
Total turnover value amounted to LKR 2.85Bn (cf. last week’s value of LKR 2.94Bn), while daily average turnover value amounted to LKR 0.57Bn (-22.53% W-o-W) compared to last week’s average of LKR 0.74Bn.
Market capitalization meanwhile, decreased by 1.39% W-o-W (or LKR 40.14Bn) to LKR 2,853.62Bn cf. LKR 2,893.76Bn last week.
Liquidity (in value terms)
The Banking, Finance & Insurance sector was the highest contributor to the week’s total turnover value, accounting for 39.74% (or LKR 1.13Bn) of market turnover.
Sector turnover was driven primarily by Commercial Bank (Voting & Non-Voting), HNB, Sampath and Central Finance accounted for 78.47% of the sector’s total turnover.
The Diversified sector meanwhile accounted for 38.52% (or LKR 1.10Bn) of the total turnover value, with turnover driven primarily by JKH and Melstacorp which accounted for 94.17% of the sector turnover. The Beverage, Food & Tobacco sector was also amongst the top sectorial contributors, contributing 6.71% (or LKR 0.19Bn) to the market driven by Cargills which accounted for 48.36% of the sector turnover.
Liquidity (in volume terms)
The Banking, Finance & Insurance also dominated the market in terms of share volume, accounting for 39.17% (or 33.57Mn shares) of total volume, with a value contribution of LKR 1.13Bn.
The Diversified sector followed suit, adding 23.96% to total turnover volume as 20.53Mn shares were exchanged.
The sector’s volume accounted for LKR 1.10Bn of total market turnover value.
The Manufacturing sector meanwhile, contributed 7.12Mn shares (or 8.30%), amounting to LKR 0.16Bn.
Top gainers and losers
Adam Investments was the week’s highest price gainer; increasing 100.0% W-o-W from LKR0.10 to LKR0.20.
Ceylon Printers gained 21.4% W-o-W to close at LKR61.90. Tess Agro’s Non-Voting (+20.0% W-o-W) and Voting (+16.7% W-o-W) shares were also amongst the top gainers.
Adam Capital was the week’s highest price loser; declining 25.0% W-o-W to close at LKR0.30 while Amana Takaful (-12.5% W-o-W), Mullers (-12.5% W-o-W) and Samson International (-12.5% 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 0.90Bn relative to last week’s total net outflow of LKR 0.39Bn (-129.6% W-o-W).
Total foreign purchases decreased by 52.0% W-o-W to LKR 0.85Bn from last week’s value of LKR 1.76Bn, while total foreign sales amounted to LKR 1.75Bn relative to LKR 2.15Bn recorded last week (-18.93% W-o-W).
In terms of volume S M B Leasing (NV) & Teejay Lanka led foreign purchases while Dialog & JKH led foreign sales.
In terms of value Cargills & Lion Brewery led foreign purchases while JKH & Commercial Bank led foreign sales.
Point of view
Sri Lankan equities remained in the doldrums yet again this week, recording its 2nd highest weekly loss for the year (~86 points cf. 103 point loss two weeks ago) and breaching the key 6100-mark to hit a 15-month low (6044.03 points).
However, the ASPI rebounded from this low within a day as the continuous slide on the benchmark index over the last seven weeks led to bargain-hunting on blue-chip stocks.
The ASPI consequently recorded its highest daily Index gain in 14-months, with the Index gaining ~74 points (or 1.22%) on Thursday (cf. ~97 point one-day loss in April 17).
Stronger buying on Thursday helped push the Index back over the 6100-mark and appeared to establish 6100 as the new support level for the Index.
However, confusion over fuel price changes created a sense of policy uncertainty once again, and dragged sentiment lower on Friday.
Sri Lanka’s fuel-pricing revisions which were previously scheduled to come into effect every two months, was unexpectedly changed on Thursday to be revised weekly.
The broad share ASPI consequently dropped a marginal 9 points over Friday, but the Index held on above the 6100-level mark to close the week at 6108.7 points.
The foreign equity sell-off on the Sri Lankan equities meanwhile, continued once again this week, with the net outflows from the CSE expanding notably to Rs. 900Mn from Rs.392 last week.
Foreigners have been net sellers on the Index for four consecutive weeks, tracking the heightened risk-aversion (over the last four weeks) for EM/FM assets in general.
Markets in the week ahead are likely to look for cues both from domestic political developments and broader global financial market themes.
Policy rates held steady for second time since April
The CBSL held policy rates steady during its 4th review for the year (SDFR-7.25% and SLFR-8.50%) citing stabilizing inflation levels and amid slower Q1’18 growth.
The Monetary Authority noted that although money market rates have remained elevated (despite its rate cut in April), nominal and real interest rates would gradually adjust downwards in line with the CBSL’s neutral policy stance and the prevailing low inflation environment.
The CBSL also noted that private credit growth has moderated from the ‘festive season-led credit expansion’ in Mar’18 and that inflation is expected to stabilise at mid-single digit levels despite temporary supply side pressures.
Urban and national inflation levels remained at low single digit levels, despite upward revisions to domestic fuel prices and although the CBSL expects some upside pressure on near term inflation due to the off-season of domestic food supplies, inflation over the remainder of the year is expected to remain at the desired mid-single digits amid ‘firmly anchored inflation expectations and appropriate policy adjustments’.
The CBSL acknowledged meanwhile that Q1’18 GDP growth remained subdued (3.2% Y-o-Y cf. 3.3% Y-o-Y in Q1’17) amid slower growth in Industry-related activities.
The Bank noted that while the i) sustained recovery in the global economy, ii) the low inflation environment and, iii) appropriately valued flexible exchange rate are expected to facilitate higher growth over the remainder of the year, the GoSL’s continued commitment to the implementation of structural reforms and fiscal consolidation will be vital for the country to achieve its medium-term growth potential.
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