The Bourse ended the week on a negative note as the ASPI decreased by 77.46 points (or -1.28%) to close at 5,954.62 points, while the S&P SL20 Index also decreased by 38.35 points (or -1.28%) to close at 2,951.99 points.
Turnover & market capitalization
JKH was the highest contributor to the week’s turnover value, contributing LKR 2.14Bn or 43.26% of the total turnover value. Sampath followed suit, accounting for 5.08% of turnover (value of LKR 0.25Bn) while Access Engineering contributed LKR 0.22Bn to account for 4.42% of the week’s turnover. Total turnover value amounted to LKR 4.95Bn (cf. last week’s value of LKR 4.85Bn), while the daily average turnover value amounted to LKR 0.99Bn (+2.10% W-o-W) compared to last week’s average of LKR 0.97Bn. Market capitalization meanwhile, decreased by 1.13% W-o-W (or LKR 31.62Bn) to LKR 2,769.48Bn cf. LKR 2,801.10Bn last week.
Liquidity (in value terms)
The Diversified sector was the highest contributor to the week’s total turnover value, accounting for 46.66% (or LKR 2.31Bn) of market turnover. Sector turnover was driven primarily by JKH and Browns Investments which accounted for 98.44% of the sector’s total turnover. The Bank, Finance & Insurance sector meanwhile accounted for 19.08% (or LKR 0.94Bn) of the total turnover value, with turnover driven primarily by Sampath, LB Finance and HNB which accounted for 59.63% of the sector turnover. The Manufacturing sector was also amongst the top sectorial contributors, contributing 12.88% (or LKR 0.64Bn) to the total turnover, with turnover driven primarily by Royal Ceramic & Tokyo Cement accounting for 56.46% of the total turnover.
Liquidity (in volume terms)
The Diversified sector dominated the market in terms of share volume, accounting for 26.81% (or 45.25Mn shares) of total volume, with a value contribution of LKR 2.31Bn. The Manufacturing sector followed suit, adding 14.47% to total turnover volume as 24.42Mn shares were exchanged. The sector’s volume accounted for LKR 0.66Bn of total market turnover value. The Banks, Finance & Insurance sector meanwhile, contributed 23.15Mn shares (or 13.32%), amounting to LKR 0.94Bn.
Company DPS (Rs.) Type XD Date; CEYLON TOBACCO 21.00 Third Interim 21-11-2019 DILMAH CEYLON 20.00 First Interim 18-11-2019
Key Economic Indicators; Prime Lending Rate- 10.42%, Ave. Wtd. Deposit Rates- 8.37%, Ave. Wtd. Fixed Dep. Rates- 10.27%, CCPI Inflation Y-o-Y % (Base 2013)- 5.4%,
Top gainers & losers
S M B Leasing [NV] was the week’s highest price gainer; increasing 33.3% W-o-W from LKR0.30 to LKR0.40 while Lighthouse Hotel (+20.6% W-o-W), Resus Energy (+16.5% W-o-W) and Jetwing Symphony (+11.3% W-o-W) were also amongst the top gainers.
Beruwala Resorts was the week’s highest price loser; declining 18.2% W-o-W to close at LKR0.90 while Chemanex (-15.7% W-o-W), Seylan Bank [NV] (-14.4% W-o-W) and Tess Agro (-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 1.35Bn relative to last week’s total net outflow of LKR 0.50Bn (-181.02% W-o-W). Total foreign purchases decreased by 21.59% W-o-W to LKR 0.91Bn from last week’s value of LKR 1.16Bn, while total foreign sales amounted to LKR 2.26Bn relative to LKR 1.64Bn recorded last week (+37.70% W-o-W). In terms of volume, Dialog Axiata & LB Finance led foreign purchases while Vidullanka & JKH led foreign sales. In terms of value, Dialog Axiata and LB Finance led foreign purchases while JKH & Vidullanka led foreign sales.
Point of view
Markets closed in the red for the 1st time in a month as investors booked profits one week ahead of the country’s 8th Presidential election. Domestic equities had gained 6% in the one month ahead of the Presidential elections, but this week’s profit-taking led to the ASPI closing 1.3% lower over the week. Nevertheless, the recovery in the ASPI in the run-up to the November 16th elections has helped trim the overall YTD loss on the Index. The ASPI lost close to 12% in H1’19 as losses over Q1’19 were exacerbated by the Easter Terror attacks and subsequent communal violence. The 11% gain on the Index between July’19 in the run-up to the elections, however, have helped pare down the Index’s losses, trimming the YTD loss on the Index to 1.8%.
Foreign investors meanwhile remained net sellers of Sri Lankan equities this week as each of the key candidates’ election pledges indicated greater pressure on the country’s already strained fiscal balances. Net foreign outflows from the Bourse over the week consequently amounted to Rs. 1.3Bn (cf. outflow of Rs. 0.5Bn last week) as foreign investors sold off Rs.1.4Bn of premier blue-chip JKH. Local HNI and institutional investors however, mopped up the shares, resulting in crossings for the week in JKH accounting for ~77% of the week’s total crossings. The transaction also helped daily turnover on the Colombo Bourse hit a 7-week high of Rs. 1.96Bn, and pushed average daily turnover levels up to Rs. 0.99Bn (cf. Rs. 0.97Bn last week and YTD average of Rs. 0.68Bn). Meanwhile, of the 30% of listed companies that have reported September quarter earnings, ~53% reported a decline in Y-o-Y earnings for the quarter reflecting the largely subdued macro-economic conditions over the quarter. Markets in the holiday-shortened week ahead are likely to take cues both from ongoing earnings releases and developments ahead of next weekend’s presidential elections.
Business confidence rises to 8M high
Business Confidence in Sri Lanka rose to an 8-month high in October, with the LMD-Nielsen Business Confidence Index (BCI) recording a 12 Bps increase since September to hit a value of 102. The Index provider noted that although Sri Lanka’s GDP growth recorded its lowest value (1.6% in Q2’19) in 21 quarters due to the impact from the Easter Sunday bombings, micro and macro indicators have steadily improved since then helping push up the Index value (which fell to an 11 year low in June 19 following the attacks). LMD-Nielson also noted that annual inflation has remained below 2% while imports have fallen sharply and tourist arrivals have recovered at a faster than anticipated pace, helping buffer FX reserves.
The BCI provider also noted that while pre-poll positivity seems to have been sustained in October, politics remain a major national concern among businesses and consumers, with taxes, policies, and inflation remaining the prime concerns for businesses.
In its latest report on the South Asian region meanwhile, the IMF noted that while South Asia currently contributes to over 15% of global growth (largely due to India), the region is poised to play an even bigger role in the global economy, in both relative and absolute terms.
The report noted that India has overtaken China as the fastest-growing large economy and South Asia’s contribution to global growth is set to increase amid greater economic diversification in the region along with an expansion of the service sector, improvements in education, and a ‘still sizable’ demographic dividend in the region.
The IMF also noted that productivity-enhancing reforms in India could be expected to boost the level of GDP in the rest of Asia with the spillover to Sri Lanka and Bangladesh, in particular, being substantial.
According to the IMF, the structural reform scenario in India would be expected to boost the level of GDP in Bangladesh and Sri Lanka by about 3%, relative to a no-reform baseline scenario.
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