The Bourse ended the week on a positive note as the ASPI increased by 58.37 points (or 0.98 percent) to close at 5,991.29 points, while the S&P SL20 Index also increased by 91.95 points (or 3.29 percent) to close at 2,883.01 points.
Commercial Bank was the highest contributor to the week’s turnover value, contributing LKR 0.88Bn or 31.05 percent of the total turnover value. HNB followed suit, accounting for 10.71 percent of turnover (value of LKR 0.30Bn) while Sampath Bank contributed LKR 0.29Bn to account for 10.03 percent of the week’s turnover. The total turnover value amounted to LKR 2.85Bn (cf. last week’s value of LKR 4.73Bn), while the daily average turnover value amounted to LKR 0.57Bn (-51.87 percent W-o-W) compared to last week’s average of LKR 1.18Bn. Market capitalization meanwhile, decreased by 1.00 percent W-o-W (or LKR 27.67Bn) to LKR 2,787.69Bn cf. LKR 2,760.02Bn last week.
Liquidity (in Value Terms)
The Banks Industry Group was the highest contributor to the week’s total turnover value, accounting for 55.92 percent (or LKR 1.59Bn) of market turnover. Sector turnover was driven primarily by Commercial Bank, HNB & Sampath which accounted for 92.62 percent of the sector’s total turnover. The Capital Goods Industry Group meanwhile accounted for 18.04 percent (or LKR 0.51Bn) of the total turnover value, with turnover driven primarily by JKH, Access Engineering, Browns & Hemas Holdings which accounted for 97.11 percent of the sector turnover. The Food, Beverage & Tobacco Industry Group was also amongst the top sectorial contributors, contributing 9.55 percent (or LKR 0.27Bn) to the total turnover, with turnover primarily driven by Ceylon Tobacco & Lion Brewery which accounted for 52.68 percent of the sector turnover.
Liquidity (in Volume Terms)
The Food, Beverage & Tobacco Industry Group dominated the market in terms of share volume, accounting for 26.06 percent (or 18.87Mn shares) of total volume, with a value contribution of LKR 0.27Bn. The Banks Industry Group followed suit, adding 25.37 percent to total turnover volume as 18.38Mn shares were exchanged. The Industry Group’s volume accounted for LKR 1.59Bn of total market turnover value. The Capital Goods Industry Group meanwhile, contributed 13.25Mn shares (or 18.29 percent), amounting to LKR 0.51Bn.
Top Gainers & Losers
Tess Agro was the week’s highest price gainer; increasing 20.0 percent W-o-W from LKR0.50 to LKR0.60 while Kelsey Developments (+18.6 percent W-o-W), Keells Hotels (+13.5 percent W-o-W) and Equity Two (+13.0 percent W-o-W) were also amongst the top gainers. Trade Finance was the week’s highest price loser; declining 24.7 percent W-o-W to close at LKR55.60 Tess Agro (-20.0 percent W-o-W), SMB Leasing (-16.7 percent W-o-W) and Dialog Finance(-14.8 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 965.8Mn relative to last week’s total net outflow of LKR 649.2Mn (-48.8 percent W-o-W). Total foreign purchases decreased by 80.7 percent W-o-W to LKR 0.59Bn from last week’s value of LKR 3.06Bn, while total foreign sales amounted to LKR 1.56Bn relative to LKR 3.71Bn recorded last week (-58.10 percent W-o-W). In terms of volume, Sampath Bank & Browns Investments led foreign purchases while Commercial Bank & Access Engineering led to foreign sales. In terms of value, Sampath Bank & Central Finance led foreign purchases while Commercial Bank & Hemas Holdings led foreign sales.
Key Economic Indicators
Indicators for December 2019; Prime Lending Rate- 10 percent, Ave. Wtd. Deposit Rates- 8.2 percent, Ave. Wtd. Fixed Dep. Rates- 10.05 percent, CCPI Inflation Y-o-Y percent (Base 2013)- 4.8 percent
Point of View
Equity markets snapped 3-consecutive weeks of losses to close in the green as market sentiment was rejuvenated by further tax changes to be included in the proposed Inland Revenue Amendment Bill initially discussed in Nov’19. Profit-taking led the broad-share Index to start the week on a negative note as the ASPI fell 27 points on Monday. Market sentiment, however, experienced a turnaround as the broad share index gained for 4 consecutive days thereafter resulting in a gain of ~85 points for the rest of the week. Markets increased by ~43 points on Wednesday as the Government released tax changes to be included in proposed Inland Revenue Amendment Bill initially discussed in Nov’19 while also announcing an additional reduction in corporate taxes, lifting investor confidence.
Heavyweight JKH was the largest contributor to the Index’s weekly gain while price increases in CTC, LION, and DIST contributed 33 percent to total Index gains this week as corporate taxes on liquor and tobacco companies were slashed from 40 percent to 28 percent. Consequently, the broad share index gained ~58 index points or 1.0 percent W-o-W to close at 5,991.29 points on Friday. Meanwhile, activity levels on the Colombo Bourse remained relatively subdued compared to last week as average daily turnover fell to Rs. 0.6Bn this week (cf. Rs. 1.2Bn last week) despite improved HNI and institutional investor participation. Crossings for the week accounted for 25 percent of total market turnover (cf. last week’s 14 percent).
Interest remained concentrated mainly on select banks (COMB, SAMP, and HNB) which accounted for 77 percent of week’s crossing amid news that banks would no longer be subject to the Debt Repayment Levy from Jan’20. In contrast to overall local investor sentiments, foreign investors continued to exit domestic equities for a 4th consecutive week to record net foreign outflow of Rs. 0.97Bn vs. Rs. 0.65Bn last week.
Markets in the week ahead are likely to look cues from the CBSL’s 1st Monetary Policy Review for the year.
Inflation Jumps to Highest Level in 2 Years
National inflations levels accelerated to its highest level since Dec’17 (7.3 percent Y-o-Y) during Dec’19 to 6.2 percent Y-o-Y (from 4.1 percent in Nov’19) largely due to higher food prices owing to adverse weather conditions during the month and a lower base effect during the corresponding period last year. Consequently, food inflation increased substantially to 8.6 percent Y-o-Y in Dec’19 from 4.0 percent in Nov’19. Meanwhile, non-food inflation levels which have continued to decline from a high point of 7.5 percent Y-o-Y in Apr’19 remained unchanged at 4.2 percent Y-o-Y for the month. Price reductions in telephone charges offset some pressure from higher housing rent, transportation, and health. Urban inflation levels also experienced an increase to 4.8 percent Y-o-Y in Dec’19 compared to 4.4 percent in Nov’19 due to an increase in both food and non-food inflation levels during December.
In contrast to the increase in national inflation levels, the NCPI Core inflation, which reflects underlying inflation levels in the economy by excluding food, energy, and transport, reported a decline. NCPI Core inflation continued to trend downwards since April, decreasing to 5.2 percent Y-o-Y in Dec’19 from 5.5 percent Y-o-Y in Nov’19. Meanwhile, the IMF cut its global growth estimates to 3.3 percent for 2020 and 3.4 percent for 2021, stating that the sharp slowdown in India is a major reason for the downward revision despite the recent easing of US-China trade tensions. The reduction reflects the IMF’s concerns over slowing domestic demand in major emerging markets amid a contraction of credit growth and stress in the nonbank financial sector. Consequently, emerging and developing Asia is forecast to pick up slightly from 5.6 percent in 2019 to 5.8 percent in 2020 and 5.9 percent in 2021. On the back of heightened trade tensions weighing on exports and investment, global growth expanded by 2.9 percent in 2019 (its slowest pace since the global financial crisis).
Sources: Department of Census & Statistics, Reuters and IMF.
0 comments: