The Bourse ended the week on a negative note as the ASPI decreased by 54.63 points (or -0.91 percent) to close at 5,932.92 points, while the S&P SL20 Index also decreased by 39.70 points (or -1.40 percent) to close at 2,791.06 points. The ASPI closed in the Red for 3rd Consecutive Week of 2020.
Turnover & market capitalization
Softlogic Life was the highest contributor to the week’s turnover value, contributing LKR 2.64Bn or 55.81 percent of total turnover value. JKH followed suit, accounting for 12.60 percent of turnover (value of LKR 0.60Bn) while Cold Stores contributed LKR 0.40Bn to account for 8.37 percent of the week’s turnover. Total turnover value amounted to LKR 4.73Bn (cf. last week’s value of LKR 26.2Bn), while the daily average turnover value amounted to LKR 1.18Bn (-81.91 percent W-o-W) compared to last week’s average of LKR 6.54Bn. Market capitalization meanwhile, decreased by 0.91 percent W-o-W (or LKR 25.39Bn) to LKR 2,760.02Bn cf. LKR 2,785.41Bn last week.
Liquidity (in value terms)
The Banks, Finance & Insurance sector was the highest contributor to the week’s total turnover value, accounting for 62.10 percent (or LKR 2.94Bn) of market turnover. Sector turnover was driven primarily by Softlogic Life, Sampath Bank, Commercial Bank & Amana Bank which accounted for 96.12 percent of the sector’s total turnover. The Diversified sector meanwhile accounted for 17.59 percent (or LKR 0.83Bn) of the total turnover value, with turnover driven primarily by JKH & Browns Investments which accounted for 96.38 percent of the sector turnover. The Beverage, Food & Tobacco sector was also amongst the top sectorial contributors, contributing 10.27 percent (or LKR 0.49Bn) to the total turnover, with turnover primarily driven by Cold Stores & Ceylon tobacco which accounted for 95.68 percent of the sector turnover.
Liquidity (in volume terms)
The Banks, Finance & Insurance sector dominated the market in terms of share volume, accounting for 47.59 percent (or 100.38Mn shares) of total volume, with a value contribution of LKR 2.94Bn. The healthcare sector followed suit, adding 20.05 percent to total turnover volume as 42.30Mn shares were exchanged. The sector’s volume accounted for LKR 0.07Bn of total market turnover value. The Diversified sector meanwhile, contributed 41.62Mn shares (or 19.73 percent), amounting to LKR 0.83Bn.
Top gainers & losers
SMB Leasing was the week’s highest price gainer; increasing 20.0 percent W-o-W from LKR0.50 to LKR0.60 while ACL Plastics (+7.4 percent W-o-W), Browns Beach (+6.7 percent W-o-W) and Odel PLC (+6.4 percent W-o-W) were also amongst the top gainers.
Tess Agro was the week’s highest price loser; declining 16.7 percent W-o-W to close at LKR0.50 Merc Shipping (-16.5 percent W-o-W), Beruwala Resorts (-10.0 percent W-o-W) and Muller’s (-10.0 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 649.2Mn relative to last week’s total net outflow of LKR 19.1Mn (-3299.9 percent W-o-W). Total foreign purchases decreased by 86.8 percent W-o-W to LKR 3.07Bn from last week’s value of LKR 23.20Bn, while total foreign sales amounted to LKR 3.71Bn relative to LKR 23.23Bn recorded last week (-84.01 percent W-o-W). In terms of volume, Richard Pieris & Dialog Axiata led foreign purchases while JKH & Browns Investments led to foreign sales. In terms of value, Richard Pieris & Seylan Bank [NV] led foreign purchases while JKH & Hayleys led foreign sales.
Key economic 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
Equities markets continued to lose ground for the 3rd consecutive week as a rating outlook downgraded to ‘Negative’ from ‘Stable’ by S&P dampened investor sentiment amid greater selling pressure this week. Losses on the index were in contrast to EM/FM markets which were buoyed by the U.S. – China “Phase 1” agreement (signed on Wednesday) while positive economic indicators with regard to China signaled some stabilisation. Persistent selling pressure in domestic equities during the holiday shortened week, however, led the broad-share index to shed ~55 index points or -0.9 percent W-o-W to close at 5,932.92 on Friday while selling in select banking sector stocks (amid a circular by the Central Bank regarding the one year moratorium on SME loans) weighed down the index during the week.
Activity levels on the Colombo Stock Exchange remained elevated this week due to HNI and Institutional participation with crossings accounting for ~76 percent of total market turnover for the week. Investor interest was concentrated on Access Engineering, Amana Bank, JKH, Ceylon Tobacco, Singhe Hospitals and Ceylon Cold Stores during the week. Turnover levels were also bolstered by the sale of shares in Softlogic Life where a parcel representing a stake of ~19 percent changed hands on Thursday from one foreign party to another. Average daily turnover for the week consequently amounted to Rs. 1.2Bn relative to Rs. 6.5Bn last week. The transaction also led AAIC to contribute 73 percent to total crossings this week. Meanwhile, the foreign sell-off on domestic equities continued this week, with the net foreign outflows from Sri Lankan equities rising significantly to Rs. 649Mn (cf. a net outflow of Rs. 19Mn last week) led by foreign selling in heavyweight JKH. Markets in the week ahead are likely to look for cues from further economic and political developments.
Trade deficit shrinks marginally in Nov’19
Sri Lanka’s trade deficit continued to contract marginally in Nov’19 as imports declined at a faster pace (-1.3 percent Y-o-Y) than exports (-0.1 percent Y-o-Y) during the month. The marginal decline in exports was largely due to a drop in earnings from agricultural exports such as tea and spices which were affected by lower export prices. However, an increase in the volume of textile & garment exports (+3.2 percent Y-o-Y) helped offset some of the declines in Agriculture exports. Meanwhile, a moderate decline in import expenditure continued for the 13th consecutive month due to a drop in personal vehicle imports and lower expenditure on fuel (due to lower import volumes and crude oil prices). Consequently, Sri Lanka’s trade deficit for 11M’19 narrowed to $7.2Bn relative to a deficit of $9.6Bn during the same period in 2018. With declines in all major import categories, Sri Lanka’s import expenditure has fallen 11.4 percent Y-o-Y between Jan – Nov’19 to $18.2Bn relative to $20.5Bn last year.
Tourist receipts continued to decline from $367Mn in Nov’18 to $332Mn in Nov’19. However, the ongoing recovery in tourist arrivals led earnings from tourism to grow ~49 percent M-o-M. The impact of the Easter attacks however kept tourist earnings lower at $3.1Bn between Jan – Nov’19 compared to $3.9Bn last year. Meanwhile, workers’ remittances declined 5.9 percent Y-o-Y to $6.1Bn for 11M’19 relative to $6.4Bn last year. In terms of financial flows, the CSE recorded a net outflow of $36Mn in Nov’19 as foreign investors exited equity markets during the election month while the net foreign position on the Colombo Bourse for 11M’19 amounted to an outflow of $30Mn. Despite recording a net inflow of $46Mn in G-Sec markets over Nov’19, debt markets recorded a cumulative net outflow of $234Mn in G-Secs during 11M’19. During the month, Sri Lanka also received the 7th tranche totalling to $164Mn from the IMF under the EEF Program. Gross official reserves at the end of Nov’19 consequently stood at $7.5Bn (cf. $6.2 in Jan’19) while the LKR appreciated ~0.8 percent against the USD in 2019.
Source: Central Bank of Sri Lanka
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