The Bourse ended the week on a positive note as the ASPI increased by 48.41 points (or +0.82 percent) to close at 5,943.11 points, while the S&P SL20 Index also increased by 48.69 points (or +1.68 percent) to close at 2,955.37 points.
Turnover & Market Capitalization
JKH was the highest contributor to the week’s turnover value, contributing LKR 0.41Bn or 12.73 percent of total turnover value. Tokyo Cement[X] followed suit, accounting for 8.68 percent of turnover (value of LKR 0.28Bn) while Sampath Bank contributed LKR 0.27Bn to account for 8.51 percent of the week’s turnover. Total turnover value amounted to LKR 3.18Bn (cf. last week’s value of LKR 6.69Bn), while daily average turnover value amounted to LKR 0.64Bn (-52.38 percent W-o-W) compared to last week’s average of LKR 1.34Bn. Market capitalization meanwhile, increased by 0.82 percent W-o-W (or LKR 22.82Bn) to LKR 2,801.57Bn cf. LKR 2,778.75Bn last week.
Liquidity (in Value Terms)
The Diversified sector was the highest contributor to the week’s total turnover value, accounting for 24.19 percent (or LKR 0.77Bn) of market turnover. Sector turnover was driven primarily by Tokyo Cement V & NV which accounted for 70.38 percent of the sector’s total turnover. The Banks, Finance & Insurance sector meanwhile accounted for 23.14 percent (or LKR 0.74Bn) of the total turnover value, with turnover driven primarily by Sampath Bank & HNB which accounted for 49.70 percent of the sector turnover. The Diversified sector was also amongst the top sectorial contributors, contributing 23.12 percent (or LKR 0.74Bn) to the total turnover, with turnover driven primarily by JKH & Browns Investments accounting for 78.74 percent of the total turnover.
Liquidity (in Volume Terms)
The Diversified sector dominated the market in terms of share volume, accounting for 36.20 percent (or 72.22Mn shares) of total volume, with a contribution of LKR 0.74Bn. The Manufacturing sector followed suit, adding 18.00 percent to total turnover volume as 35.92Mn shares were exchanged. The sector’s volume accounted for LKR 0.77Bn of total market turnover value. The Banks, Finance & Insurance sector meanwhile, contributed 20.82Mn shares (or 10.43 percent), amounting to LKR 0.74Bn.
Top Gainers & Losers
CM Holdings was the week’s highest price gainer; increasing 37.8 percent W-o-W from LKR43.10 to LKR59.40 while Tess Agro[NV] (+25.0 percent W-o-W), Colombo Land(+23.8 W-o-W)and Lucky Lanka (+23.1 percent W-o-W) were also amongst the top gainers. Indo Malay was the week’s highest price loser; declining 19.2 percent W-o-W to close at LKR1050.40 while Beruwala Resorts (-14.3 percent W-o-W), Nationa Lanka (-12.5 percent W-o-W) and Radient Gems (-9.6 percent 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 0.01Bn relative to last week’s total net outflow of LKR 0.69Bn (+86.2 percent W-o-W). Total foreign purchases decreased by 79.2 percent W-o-W to LKR 0.38Bn from last week’s value of LKR 1.8Bn, while total foreign sales amounted to LKR 0.47Bn relative to LKR 2.50Bn recorded last week (-81.1 percent W-o-W). In terms of volume, Browns Investments & JKH led foreign purchases while Tokyo Cement[X] & Access Engineering led foreign sales. In terms of value, JKH & Browns Investments led foreign purchases while Nestle & Tokyo Cement[X] led foreign sales.
Point of View
Domestic equities maintained its upward trajectory yet again this week as political speculation over candidates for the upcoming presidential elections overshadowed weaker corporate quarterly earnings releases over the week. Despite this week’s corporate earnings releases across several key sectors (Telecos, Banks, Tourism, Consumer) indicating the negative impact from the Easter-Terror attacks, politics dominated equity market sentiment and the benchmark ASPI recorded W-o-W gains for the 7th consecutive week.
Profit-taking early in the week led to the Index losing ~48 points, but the ASPI regained the majority (ie: ~42 points) of this loss midweek as investors bought beaten-down stocks. Mounting political speculation towards end-week over the presidential candidates to be fielded by the key political parties meanwhile pushed markets up 65 points on Friday, helping the benchmark index close up 48 points (or 0.8 percent) compared to last week. Despite the strong retail-driven momentum in the Index, market turnover halved over the week as Local institutional buying remained weak, accounting for just 9 percent of total market turnover.
Crossings over the week remained concentrated on just three stocks, with JKH and NEST accounting for 92 percent of total crossings. Weekly average market turnover consequently amounted to Rs. 0.64Bn (cf. last week’s Rs. 1.34Bn). Foreign investors meanwhile remained net sellers for the 3rd consecutive week, although the net selling position on the Bourse fell 86 percent W-o-W. Foreigners have been net sellers of Sri Lankan equities for 22 of the 32 trading weeks of this year, but LOLC Holding’s strategic internal transfer of its shares in LOLC Finance to a Singaporean subsidiary has helped reduce the YTD net selling position on the CSE to Rs. 0.4Bn (cf. a YTD net selling position of Rs. 8Bn excluding the transfer). Markets in the week ahead are likely to take cues from the formal announcement of the Presidential candidate from the main opposition party.
US-China trade impasse rattles global markets
US-China trade tensions waxed and waned over the week as the US President’s announcement last Friday that he would impose a fresh 10 percent tariff on another $300Bn of Chinese goods was followed by a sharp 11 percent devaluation of the Chinese currency which analysts believe may have been retaliatory move by China for the additional taxes being imposed on its products. On Monday, the Chinese Yuan fell to its lowest value in eleven years, a move that markets believe was a retaliatory move by China which has long been accused of manipulating its currency value.
China’s moves to stabilize its currency the next day, however, helped ease the heightening trade-tensions marginally although relations between the two economic giants continue to remain edgy. One of the U.S’s key aims through its trade talks with China has been to reduce its trade deficit; but, despite its aggressive use of tariffs for over a year, the U.S’s total trade deficit continues to widen and the trade deficit rose 8 percent Y-o-Y in 6M’19 to $316.3Bn.
U.S equity markets have been volatile since the imposition of the first round of import tariffs on Chinese goods in early 2018, with the Dow Jones rising just 1 percent between Jan’18 to date relative to its 43 percent gain between Election Day in 2016 and January 2018. The two countries have had 12-rounds of negotiations since the start of the trade war but the impasse between the two countries remains, worrying global markets as the heightening trade tensions impact world economic growth by depressing financial markets, discouraging trade and heightening uncertainty for businesses. The Economic Policy Uncertainty Index (which measures policy-related uncertainty globally) is consequently hovering at its highest level ever, hitting its second-highest level (340) in June’19 cf. 341 in Dec’18 when markets experienced one of its worst Decembers due to the worsening U.S.-China trade war and an increase in U.S Fed rates.
Sources: CNBC, NPR, BBC, CNN, Startribune, VOA
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