The Bourse ended the week on a negative note as the ASPI decreased by 12.77 points (or -0.24%) to close at 5,298.18 points, while the S&P SL20 Index also decreased by 9.90 points (or -0.40%) to close at 2,459.92 points.
JKH was the highest contributor to the week’s turnover value, contributing LKR 0.12Bn or 17.96% of total turnover value. Melstacorp followed suit, accounting for 13.85% of turnover (value of LKR 0.09Bn) while Ceylinco Insurance contributed LKR 0.05Bn to account for 7.59% of the week’s turnover. Total turnover value amounted to LKR 0.67Bn (cf. last week’s value of LKR 2.83Bn), while daily average turnover value amounted to LKR 0.17Bn (-70.42% W-o-W) compared to last week’s average of LKR 0.57Bn. Market capitalization meanwhile, decreased by 0.22% W-o-W (or LKR +5.58Bn) to LKR 2,496.69Bn cf. LKR 2,502.27Bn last week. Liquidity (in Value Terms)
The Diversified sector was the highest contributor to the week’s total turnover value, accounting for 40.21% (or LKR 0.27Bn) of market turnover. Sector turnover was driven primarily by JKH, Melstacorp & Hemas Holdings which accounted for 89.80% of the sector’s total turnover. 
The Banks,Finance & Insurance sector meanwhile accounted for 31.78% (or LKR 0.21Bn) of the total turnover value, with turnover driven primarily by Ceylinco Insurance[NV],Commercial Bank,Ceylinco Insurance & Vallibel Finance which accounted for 62.61% of the sector turnover. The Beverage,Food & Tobacco sector was also amongst the top sectorial contributors, contributing 9.07%(or LKR 0.06) to the total turnover, with turnover driven primarily by Distilleries accounting for 49.14% of the total turnover.
Liquidity (in volumeterms)
The Diversified sector dominated the market in terms of share volume, accounting for 19.74% (or 6.90Mn shares) of total volume, with a value contribution of LKR 0.27Bn. The Banks, Finance & Insurance sector followed suit, adding 14.27% to total turnover volume as 4.99Mn shares were exchanged. The sector’s volume accounted for LKR 0.21Bn of total market turnover value. The Beverage,Food & Tobacco sector meanwhile, contributed 2.70Mn shares (or 7.71%), amounting to LKR 0.06Bn. Top Gainers & Losers | Blue Diamonds[NV] was the week’s highest price gainer; increasing 50.0% W-o-W from LKR0.30 to LKR0.20 while Serendib Hotels[NV](+38.2% W-o-W), Radiant Gems(+38.1% W-o-W) and Industrial Asphalts(+28.0% W-o-W) were also amongst the top gainers. E-Channeling were the week’s highest price loser; declining 12.5% W-o-W to close at LKR2.80 while Hotels Corporation(-10.4% W-o-W), Ceylon Tea Brokers (-10.0% W-o-W) and Millenium House(-10.0% 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 inflow amounting to LKR 0.03Bn relative to last week’s total net inflow of LKR 0.31Bn (-90.3% W-o-W). Total foreign purchases decreased by 51.5% W-o-W to LKR 0.29Bn from last week’s value of LKR 0.59Bn, while total foreign sales amounted to LKR 0.26Bn relative to LKR 0.28Bn recorded last week (-7.8% W-o-W). In terms of volume, Expolanka & Richard Pieris led foreign purchases while Dialog Axiata & Central Finance led foreign sales. In terms of value, Ceylinco Insurance[NV] & Vallibel Finance led foreign purchases while Central Finance & Hemas Holdings led foreign sales.
Point of View
Sri Lankan equities reversed the moderate gains it made over the last two weeks as equity markets opened the week on a negative note amid a renewed political flare-up. The week started with the mass resignation of Muslim ministers in response to a protest fast by a legislator monk calling for the resignation of three Muslim politicians. The consequent political instability weighed heavily on market sentiment, resulting in a 34 point drop in the benchmark ASPI between Monday and Tuesday. Attempts to defuse the communal tensions failed to revive sentiment, and markets remained largely flat on Thursday despite Sri Lanka’s top Buddhist prelates i) requesting the resigned minister to resume their duties and, ii) strongly urging the use of normal legal processes to clear allegations levelled towards specific politicians. By Friday however, the benchmark equity index managed to claw-back some its earlier losses as buying interest in index heavy-weight and blue chip, JKH, supported a 21 point uptick on the Index.
Nevertheless, the week’s activity levels on the Bourse remained largely lackluster, with local HNI and Institutional investors accounting for just ~20% of total weekly turnover (cf. 69% last week) and buying interest in Melstacorp contributing to the bulk (70%) of the week’s crossings. Foreign interest in domestic equities meanwhile closely tracked the political developments over the week, with foreign buying on Friday reducing the Rs.23.6Mn equity sell-off from earlier in the week.
The net foreign position for the full week consequently amounted to a net inflow of Rs. 30.5Mn, supported by foreign buying interest in Ceylinco Insurance (Non-Voting), Vallibel Finance and JKH. Markets in the week ahead are likely look for cues from ongoing political developments.
Global Crude Oil Prices Hit 5-Month Low Global Crude Oil prices hit their lowest levels since late-January on Wednesday ($60.63/bb cf. $$59.93/bbl in Jan’19) as U.S Crude oil production hit a new record high while Crude oil inventories hit their highest since July 2017. Global Crude oil markets have been in bear-market territory since reaching a peak of $74.57/bbl in late-April and this week’s oil supply-outlook pushed prices down further.
Oil prices rallied strongly in the first five months of 2019 to hit a high of nearly $75 in late April as oil supplies have been limited both by i) supply curbs by the OPEC and Russia and, ii) U.S. sanctions on oil exports from Iran and Venezuela. However, signals of slowing global economic activity have intensified over the recent weeks, fuelled by rising trade tensions between the world’s top two energy consumer the United States and China. Crude oil markets have subsequently been in bear-market territory over the last few weeks on concerns of low demand and over-supply, having lost ~16% from the peak reached in late April.
This week’s new low was also stoked by U.S. President Donald Trump’s latest threats to i) intensify the trade war between US-China by potentially imposing further tariffs on at least another $300Bn of worth of Chinese goods and, ii) introduce tariffs of up to 25% on goods from Mexico (a key U.S. trade partner and major supplier of crude oil) until the “illegal immigration problem is remedied.”
Although reports of the US considering a delay in its tariffs on Mexico helped oil prices recover almost 3% on Thursday, global crude oil prices have averaged $61.60/bbl in June amid fresh signs of a stalling global economy and ongoing concerns about U.S. crude supply growth. Crude oil markets remain watchful in anticipation of the outcome of the OPEC+ discussions later this month on whether to extend their supply curbs further. Sources: Bloomberg, Reuters, Business Inside
0 comments: