The Bourse ended the week on a negative note as the ASPI decreased by 65.73 points (or 1.36 percent) to close at 4,781.03 points, while the S&P SL20 Index also decreased by 161.51 points (or 3.05 percent) to close at 1,954.57 points.
JKH was the highest contributor to the week’s turnover value, contributing LKR 1.20Bn or 31.39 percent of total turnover value. Sampath followed suit, accounting for 13.05 percent of turnover (value of LKR 0.50Bn) while Expo Lanka contributed LKR 0.48Bn to account for 12.52 percent of the week’s turnover. Total turnover value amounted to LKR 3.83Bn (cf. last week’s value of LKR 5.15), while the daily average turnover value amounted to LKR 0.96Bn (-25.57 percent W-o-W) compared to last week’s average of LKR 1.29Bn. Market capitalization meanwhile, decreased by 1.36 percent W-o-W (or LKR 30.73Mn) to LKR 2,235.26Bn cf. LKR 2,265.99Bn last week.
Liquidity (in Value Terms)
The Capital Goods Industry Group was the highest contributor to the week’s total turnover value, accounting for 34.57 percent (or LKR 1.33Bn) of market turnover. Industry Group’s turnover was driven primarily by JKH which accounted for 90.82 percent of the sector’s total turnover. The Banks Industry Group meanwhile accounted for 23.77 percent (or LKR 0.91Bn) of the total turnover value, with turnover driven primarily by Sampath, HNB & Commercial Bank which accounted for 88.69 percent of the sector turnover. The Food Beverage & Tobacco Industry Group was also amongst the top sectorial contributors, contributing 14.18 percent (or LKR 0.54Bn) to the total turnover, with turnover driven primarily by Sunshine Holdings, Ceylon Tobacco & Lion Brewery accounting for 80.79 percent of the total turnover.
Liquidity (in Volume Terms)
The Transportation Industry Group dominated the market in terms of share volume, accounting for 65.64 percent (or 191.20Mn shares) of total volume, with a value contribution of LKR 0.48Bn. The Materials Industry Group followed suit, adding 6.35 percent to total turnover volume as 18.50Mn shares were exchanged. The Industry Group’s volume accounted for LKR 0.19Bn of total market turnover value. The Capital Goods Industry Group, meanwhile, contributed 16.78Mn shares (or 5.76 percent), amounting to LKR 1.33Bn.
Top Gainers & Losers
Hunters and Company was the week’s highest price gainer; increasing 13.3 percent W-o-W from LKR352.40 to LKR399.40 while Carsons (+13.33 percent W-o-W), Asia Capital (+12.2 percent W-o-W) and Watawala (+12.0 percent W-o-W) were also amongst the top gainers.
Blue Diamonds [NV] was the week’s highest price loser; declining 33.3 percent W-o-W to close at LKR0.20. S M B Leasing (-25.0 percent W-o-W), Tess Agro [NB] (-25.0 percent W-o-W) and ON’ALLY (-21.9 percent W-o-W) were also amongst the top losers over the week.
Foreign investors closed the week in a net selling position, with the total net outflow amounting to LKR 0.27Bn relative to a net inflow of LKR 0.09Bn recorded last week. Total foreign purchases decreased to LKR 1.28Bn from a value of LKR 1.62Bn last week, while total foreign sales amounted to LKR 1.55Bn relative to LKR 1.53Bn recorded last week. In terms of volume, JKH & Aitken Spence led foreign purchases while Expolanka & Vidullanka led foreign sales. In terms of value, JKH & CTC led foreign purchases while Sampath & Expolanka led foreign sales.
Dividend announcements
Company DPS (Rs.) Type XD Date; PIRAMAL GLASS CEYLON PLC 0.20 First & Final 12/08/2020
Key Economic Indicators April 2020; Prime Lending Rate- 9.38 percent, Ave. Wtd. Deposit Rates- 7.77 percent, Ave. Wtd. Fixed Dep. Rates- 9.51 percent, CCPI Inflation Y-o-Y percent (Base 2013)- 5.2 percent.
Point of View
Persistent selling pressure in Sri Lankan equities led the benchmark index to snap 2-consecutive weeks of gains with the broad-share index shedding ~66 points or 1.4 percent W-o-W to close at 4,781.03 points, remaining staunchly below the 4,800 mark during the holiday-shortened week. Profit-taking in heavyweights JKH and DIST weighed on the index on Monday, contributing ~51 points to this week’s decline on the index. Meanwhile, investor sentiment remained lackluster for the rest of the week, falling 14 points over 3 trading days, despite the Supreme Court ruling on the upcoming Parliamentary elections.
Losses on the index were in contrast to other EM/FM markets which hit 3M highs this week as government stimulus expectations supported investor confidence in economic recovery from the Covid-19 pandemic amid the gradual lifting of lockdowns around the world.
Meanwhile, activity levels on the Colombo Bourse fell during the holiday-shortened week with average daily turnover dropping to Rs. 1.0Bn this week (cf. Rs. 1.3Bn last week) despite greater local HNI and institutional investor participation. Consequently, crossings for the week accounted for 33 percent of total turnover (cf. to 20 percent last week).
Index heavyweight JKH accounted for 45 percent of this week’s crossings while investor buying interest was also visible in Expolanka (31 percent of total crossings), Sunshine Holdings, Vidullanka, Sampath Bank and Ceylon Tobacco.
Meanwhile, foreign investors reversed last week’s net foreign position, to record net outflow of Rs. 273.9Mn (cf. an inflow of Rs. 88.0Mn last week). Markets in the week ahead are likely to take cues from continuing earnings releases and developments regarding the upcoming parliamentary elections while monitoring the COVID-19 situation in Sri Lanka. Sources: (foreign Media)
Trade Deficit Narrows in March
Sri Lanka’s trade deficit contracted in Mar’20 amid a Government enforced lockdown aimed at controlling the spread of the COVID- 19 pandemics during the second half of March. Consequently, demand and supply disruptions along with a halt in local production resulted in a notable decline in merchandise exports and imports. However, due to a greater decline in imports, the trade deficit narrowed from $592Mn in Mar’19 to $549Mn in Mar’20. A notable 30.3 percent Y-o-Y decline in imports from $1.7Bn in Mar’19 to $1.2Bn in Mar’20 was mainly attributable to a significant decrease in fuel imports (41.7 percent Y-o-Y), and import restrictions on motor vehicles (-45.3 percent Y-o-Y) and non-essential consumer goods.
Meanwhile, exports in Mar’20 fell by 42.3 percent Y-o- Y to $0.7Bn with textiles & garments, rubber, and tea recording notable declines due to supply chain disruptions. Despite the contraction in Mar’20, a steady increase in imports along with a slowdown in exports over Jan – Feb’20, lead Sri Lanka’s trade deficit to widen from $1.7Bn in Q1’19 to $1.9Bn in Q1’20. Meanwhile, i) restrictions on travel, ii) termination of passenger flights and ships to Sri Lanka, and iii) global shutdowns also had a severe impact on the tourism industry as the country experienced a cessation of tourist arrivals from the 3rd week of March, resulting in a 70.8 percent drop in tourist arrivals during the month.
Consequently, tourist receipts are estimated to have declined to $135Mn in Mar’20 relative to $461Mn in Mar’19. Worker remittances also declined by 13.9 percent Y-o-Y to $492 Mn in Mar’20 as the return of migrant workers from South Korea and Italy coupled with weaker economic conditions in the Middle East contributed to the decline.
In terms of financial flows, the CSE recorded a net outflow of $6Mn as markets remained closed for trading since mid-March while the net foreign position on the Colombo Bourse for Q1’20 amounted to an outflow of $28Mn. Foreign outflows from G-Secs continued in line with the sell-off from bond markets of most emerging and frontier markets with markets recording a net outflow of $261Mn in Mar’20. Gross official reserves at the end of Mar’20 consequently stood at $7.5Bn (cf. $7.9Bn in Feb’20) while the LKR depreciated 2.3 percent so far this year.
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