The Bourse ended the week on a negative note as the ASPI decreased by 32.06 points (or -0.56%) to close at 5,722.25 points, while the S&P SL20 Index also decreased by 8.45 points (or -0.29%) to close at 2,859.59 points. Turnover & Market Capitalization | JKH was the highest contributor to the week’s turnover value, contributing LKR 1.50Bn or 35.77% of total turnover value.
Melstacorp followed suit, accounting for 23.68% of turnover (value of LKR 0.99Bn) while Ceylinco Insurance contributed LKR 0.42Bn to account for 10.02% of the week’s turnover. Total turnover value amounted to LKR 4.18Bn (cf. last week’s value of LKR 3.79Bn), while daily average turnover value amounted to LKR 1.05Bn(+37.77% W-o-W) compared to last week’s average of LKR 0.76Bn. Market capitalization meanwhile, decreased by 0.56% W-o-W (or LKR 14.99Bn) to LKR 2,674.63Bn cf. LKR 2,689.61Bn last week.
Liquidity (in Value Terms)
The Diversified sector was the highest contributor to the week’s total turnover value, accounting for 60.02% (or LKR 2.51Bn) of market turnover.
Sector turnover was driven primarily by JKH & Melstacorp which accounted for 99.06% of the sector’s total turnover. The Banks, Finance & Insurance sector meanwhile accounted for 27.81% (or LKR 1.16Bn) of the total turnover value, with turnover driven primarily by Ceylinco Insurance, NDB Bank, Sampath Bank & Commercial Bank which accounted for 87.14% of the sector turnover.
The Beverage, Food & Tobacco sector was also amongst the top sectorial contributors, contributing 5.20%(or LKR 0.22) of the total turnover, where sector turnover was primarily driven by Ceylon Tobacco & Cold Stores which accounted for 97.32% of the sector turnover.
Liquidity (in Volume Terms)
The Diversified sector dominated the market in terms of share volume, accounting for 56.43% (or 36.83 Mn shares) of total volume, with a value contribution of LKR 2.51Bn. The Banks, Finance & Insurance sector followed suit, adding 21.70% to total turnover volume as 14.16Mn shares were exchanged.
The sector’s volume accounted for LKR 1.16Bn of total market turnover value. The Manufacturing sector meanwhile, contributed 5.17Mn shares (or 7.92%), amounting to LKR 0.19Bn. Top Gainers & Losers | SMB Leasing[NV] was the week’s highest price gainer; increasing 50.0% W-o-W from LKR0.20to LKR0.30 while Resus Energy(+27.3% W-o-W), SMB Leasing (+25.0% W-o-W) and Sinhaputhra Finance (+16.7% W-o-W) were also amongst the top gainers. Renuka Holdings[NV] Hotel were the week’s highest price loser; declining 16.7% W-o-W to close at LKR10.0 while Renuka Food[NV](-14.3% W-o-W), Mullers (-14.3% W-o-W) and Laxapana(-13.3% W-o-W) were also amongst the top losers over the week.
Point of View
Sri Lankan equities lost further momentum this week, slipping ~32 points W-o-W as negative sentiment persisted despite the presentation of the 2019 Budget. The ASPI climbed 16.3 points ahead of the Budget reading on Tuesday in anticipation of an election budget. Following the Budget presentation however, ASPI fell 19.0 points, reversing all gains from the previous day as proposals to improve trade and investments failed to uplift investor sentiments.
On Friday, selling pressure in heavy weight CTC (-1.7% W-o-W) and blue chip Melstacorp (-10.7% W-o-W) pulled the Broad-share index down a further ~30 points amid concerns over higher taxes on tobacco and liquor.
Consequently, the Broad-share index closed the week at 5,722.25 points, the lowest since Sept 2013. Activity levels however, continued to improve this week despite the holiday shortened trading week, as average daily turnover for the week increased to Rs. 1.05Bn (+38% W-o-W) compared to Rs. 0.76Bn last week. However, HNI and Institutional participation was largely sluggish this week with off-market transactions accounting for merely 15% of total turnover for the week (cf. an average weekly contribution of 44% this year).
Crossings in Ceylinco Insurance (62% of crossings) accounted for the bulk of the week’s total crossings while NDB (16% of crossings) and Sampath Bank (16% of crossings) also gained some interest.
Foreign investors on the Colombo Bourse meanwhile were net sellers this week with a total net outflow of Rs. 1.0Bn (cf. last week’s net inflow of Rs. 0.5Bn) as foreign selling in Sri Lanka’s main blue chip JKH totalled Rs. 1.3Bn for the week. As a result, net outflows from domestic equities so far this year has risen to Rs.6.0Bn. Markets in the week ahead are likely to look for cues from further economic and political developments.
Budget centred around ‘Enterprise Sri Lanka’ initiative
The 2019 Budget presented by the GoSL this week encompassed a mix of measures aimed at balancing short-term macroeconomic pressures in the economy while keeping with the country’s long term development agenda and maintaining policy consistency.
In line with this policy agenda, the 2019 Budget included proposals to promote investments, liberalize trade and deepen integration of SMEs into the national and global value chain. In this regard, several concessionary loan schemes were proposed through the ‘Enterprise Sri Lanka’ initiative, aimed at driving greater private sector growth. The initiative was also extended to include necessary human capital development and focused on skill improvement of the labour force. Budget 2019 also proposed greater FDI’s via incentives such as capital allowances for high value investments over $100Mn to help the country continue to achieve the high FDI’s it attracted in 2017 & 2018. Proposals to liberalize trade meanwhile include phasing out para-tariffs over a 5 year period while an accelerated CESS reduction programme to support construction, tourism and manufacturing sectors was also proposed. The GoSL also emphasized on its commitment to continue its focus on fiscal consolidation and aims to reduce the fiscal deficit to 4.4% of GDP for 2019.
In terms of capital markets meanwhile, the Budget included proposals to develop a deep and liquid capital market via Scrip-less SLDBs and Coupon Stripping of T-bonds while initiatives to encourage more female representation on the Director boards of Listed Corporates were also proposed.
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