The Bourse ended the week on a negative note as the ASPI increased by 12.77 points (or 0.22 percent) to close at 5,942.53 points, while the S&P SL20 Index also increased by 0.31 points (or 0.01 percent) to close at 2,835.35 points.
Turnover & market capitalization
Commercial Bank was the highest contributor to the week’s turnover value, contributing LKR 0.38Bn or 21.29 percent of total turnover value. JKH followed suit, accounting for 21.02 percent of turnover (value of LKR 0.21Bn) while Peoples Leasing contributed LKR 0.11Bn to account for 6.26 percent of the week’s turnover. Total turnover value amounted to LKR 1.77Bn (cf. last week’s value of LKR 2.98Bn), while the daily average turnover value amounted to LKR 0.44Bn (-25.69 percent W-o-W) compared to last week’s average of LKR 0.60Bn. Market capitalization meanwhile, increased by 0.24 percent W-o-W (or LKR 6.55Bn) to LKR 2,767.65Bn cf. LKR 2,767.11Bn last week.
Liquidity (in value terms)
The Banks Industry Group was the highest contributor to the week’s total turnover value, accounting for 34.09 percent (or LKR 0.60Bn) of market turnover. Industry Group’s turnover was driven primarily by Commercial Bank, Sampath Bank, & HNB which accounted for 83.32 percent of the sector’s total turnover. The Capital Goods Industry Group meanwhile accounted for 21.33 percent (or LKR 0.38Bn) of the total turnover value, with turnover driven primarily by JKH & Access Engineering which accounted for 79.50 percent of the sector turnover. The Food Beverage & Tobacco Industry Group was also amongst the top sectorial contributors, contributing 15.12 percent (or LKR 0.27Bn) to the total turnover, with turnover primarily driven by Cold Stores & Lion Brewery which accounted for 66.11 percent of the sector turnover.
Liquidity (in volume terms)
The Utilities Industry Group dominated the market in terms of share volume, accounting for 30.13 percent (or 21.54Mn shares) of total volume, with a value contribution of LKR 0.10Bn. The Diversified Financial Industry Group followed suit, adding 14.58 percent to total turnover volume as 10.43Mn shares were exchanged. The Industry Group’s volume accounted for LKR 0.15Bn of total market turnover value. The Banks Industry Group meanwhile, contributed 9.39Mn shares (or 13.13 percent), amounting to LKR 0.60Bn.
Top gainers & losers
Ambeon Capital was the week’s highest price gainer; increasing 15.6 percent W-o-W from LKR4.50 to LKR5.20 while Singhe Hospitals (+13.3 percent W-o-W), Singhe Ind. (+13.0 percent W-o-W) and Amana Life (+11.4 percent W-o-W) were also amongst the top gainers.
Lanka Ceramics was the week’s highest price loser; declining 15.1 percent W-o-W to close at LKR93.40, Kotagala (-14.3 percent W-o-W), Blue Diamond (-14.3 percent W-o-W) and Beruwala Resorts (-11.1 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 0.44Bn relative to last week’s total net outflow of LKR 1.23Bn (+64.6 percent W-o-W). Total foreign purchases increased by 45.9 percent W-o-W to LKR 0.39Bn from last week’s value of LKR 0.27Bn, while total foreign sales amounted to LKR 0.83Bn relative to LKR 1.50Bn recorded last week (-44.75 percent W-o-W). In terms of volume, People’s Leasing & Dialog led foreign purchases while Vidullanka & Commercial Bank led foreign sales. In terms of value, People’s Leasing & Dialog led foreign purchases while Commercial Bank & JKH led foreign sales.
Dividend Announcements
Company DPS (Rs.) Type XD Date; TEEJAY LANKA 1.30 First Interim 17-02-2020
Key Economic Indicators 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
Market sentiment continued to vary during the holiday-shortened week amid developments regarding the Coronavirus epidemic and Sri Lanka’s Public Finance Committee decided to defer the approval for the recently proposed VAT reduction and changes to excise duties on tobacco.
Despite uncertainties surrounding tobacco tax cuts, ongoing buying interest in Ceylon Tobacco (up 4.5 percent W-o-W) drove the ASPI to reverse last week’s losses and the broad-share index recorded a marginal gain of 12.8 points (or 0.2 percent W-o-W) this week.
This was in tune with most Emerging and Frontier peers that were also on track to post weekly gains as i) growing optimism that the outbreak could be contained, ii) cash injections to China’s financial markets and iii) China’s decision to slash tariffs on US imports curbed investor fears over the economic impact of the virus. Meanwhile, activity levels on the Colombo Bourse fell during the holiday-shortened week with average daily turnover dropping to Rs. 0.4Bn this week (cf. Rs. 0.6Bn last week) despite support from HNI and institutional investors.
Crossings for the week consequently accounted for 29 percent of total market turnover (cf. last week’s 27 percent) as last week’s interest in select banking sector stocks (COMB and NTB) continued this week, accounting for 44 percent of the week’s total crossing. Meanwhile, buying interest was also observed in JKH and its consumer foods arm which collectively contributed 38 percent to total crossing this week while Vidullanka accounted for the remainder. Foreign investors, however, continued to withdraw funds from Sri Lankan equities during the week albeit at a slower pace (net foreign outflow amounted to Rs. 0.4Bn cf. net outflow of Rs. 1.2Bn last week). Markets in the week ahead are likely to look for cues from both from ongoing earnings releases and domestic and global economic developments.
Equities Rally Despite Signs of Coronavirus Un-abating
EM/FM equity markets rallied from nearly 2-month lows this week amid easing concerns about the global economic impact from the coronavirus epidemic. On Monday, Chinese equity markets reopened for trade (from the Lunar New Year break which was extended to reduce the spread of the virus) and the benchmark Shanghai Composite index tumbled 8 percent to its largest daily fall since 2015.
EM/FM assets tracked the Asian giant, falling for the 8th straight session as investors remained worried about the impact of the Coronavirus on the Chinese economy and its spillover impact on other Asian markets. However, China’s efforts to assuage markets by unexpectedly lowering rates and injecting a total of 1.2 trillion yuan ($173.81Bn) into money markets on Monday helped ease investor concerns and resulted in the EM/FMs recovering from their near 2-month lows (between Tue-Thu the MSCI EM rose 4 percent while the MSCI FM rose 2 percent).
Despite the turnaround in global equity markets, the number of deaths and new cases of the Coronavirus continued to rise this week with the latest count by Friday indicating a more than doubling since last week (the number of new cases globally was 31,000 by Friday cf. 14,549 last week while the death toll rose to 638 cf. 305 deaths last week). The growth in new cases/deaths from the virus prompted several Emerging countries to try to protect their economies from the fallout of the outbreak and resulted in several EM’s such as the Philippines, Thailand, Brazil cutting interest rates.
The median policy interest rate for emerging economies consequently fell below 3 percent for the 1st time in January to 2.75 percent. Meanwhile, in a further effort to ease the potential economic impact from the Coronavirus outbreak, China announced on Thursday that it would halve the additional tariffs it levied against 1,717 U.S. goods last year. The World Bank meanwhile, said it would revise down its global growth forecast due to concerns over the epidemic’s impact on global supply chains.
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