The Bourse ended the week on a positive note as the ASPI increased by 172.93 points (or 3.47 percent) to close at 5,163.35 points, while the S&P SL20 Index also increased by 134.32 points (or 6.23 percent) to close at 2,290.85 points.
Commercial Bank was the highest contributor to the week’s turnover value, contributing LKR 0.94Bn or 13.49 percent of total turnover value. HNB followed suit, accounting for 11.32 percent of turnover (value of LKR 0.79Bn) while Hemas Holdings contributed LKR 0.53Bn to account for 7.54 percent of the week’s turnover. Total turnover value amounted to LKR 6.98Bn (cf. last week’s value of LKR 7.08), while the daily average turnover value amounted to LKR 1.40Bn (-1.32 percent W-o-W) compared to last week’s average of LKR 1.42Bn. Market capitalization meanwhile, increased by 3.47 percent W-o-W (or LKR 80.75Mn) to LKR 2,411.11Bn cf. LKR 2,330.36Bn last week.
Liquidity (in Value Terms)
The Banks Industry Group was the highest contributor to the week’s total turnover value, accounting for 44.17 percent (or LKR 3.08Bn) of market turnover. Industry Group’s turnover was driven primarily by Commercial Bank, HNB, Nations Trust, HNB [NV] & Sampath Bank which accounted for 89.51 percent of the sector’s total turnover. The Capital Goods Industry Group meanwhile accounted for 22.76 percent (or LKR 1.59Bn) of the total turnover value, with turnover driven primarily by Hemas Holdings, JKH & Royal Ceramics which accounted for 76.72 percent of the sector turnover. The Diversified Financials Industry Group was also amongst the top sectorial contributors, contributing 10.55 percent (or LKR 0.74Bn) to the total turnover, with turnover driven primarily by LOLC Holdings accounting for 60.70 percent of the total turnover.
Liquidity (in Volume Terms)
The Materials Industry Group dominated the market in terms of share volume, accounting for 17.80 percent (or 48.30Mn shares) of total volume, with a value contribution of LKR 0.50Bn. The Food Beverage & Tobacco Industry Group followed suit, adding 15.46 percent to total turnover volume as 41.94Mn shares were exchanged. The Industry Group’s volume accounted for LKR 0.32Bn of total market turnover value. The Banks Industry Group, meanwhile, contributed 39.53Mn shares (or 14.57 percent), amounting to LKR 3.08Bn.
Top Gainers & Losers
S M B Leasing [NV] was the week’s highest price gainer; increasing 50.0 percent W-o-W from LKR20.00 to LKR30.00 while Raigam Salterns (+25.0 percent W-o-W), Tess Agro (+25.0 percent W-o-W) and Equity Two PLC (+23.0 percent W-o-W) were also amongst the top gainers.
S M B Leasing was the week’s highest price loser; declining 25.0 percent W-o-W to close at LKR0.30. Shalimar (-22.7 percent W-o-W), Amana Life (-17.9 percent W-o-W) and Browns Investments (-13.8 percent W-o-W) were also amongst the top losers over the week.
Foreign investors closed the week in a net selling position, with the total net outflow amounting to LKR 1.48Bn relative to a net outflow of LKR 2.65Bn recorded last week(+44.1 percent W-o-W). Total foreign purchases decreased by 69.5 percent W-o-W to LKR 0.21Bn from a value of LKR 0.70Bn last week, while total foreign sales amounted to LKR 1.69Bn relative to LKR 3.35Bn recorded last week (-49.4 percent W-o-W). In terms of volume, Richard Pieris and HNB led foreign purchases while Hemas Holdings & Nations Trust led to foreign sales. In terms of value, Richard Pieris & HNB led foreign purchases while Hemas Holdings & Nations Trust led foreign sales.
Dividend Announcements
Company DPS (Rs.) Type XD Date; CENTRAL INDUSTRIES 2.00 Final 04-08-2020 SRI LANKA TELECOM 1.06 First & Final 16-07-2020 Company Proportion Shares to be Issued Type CENTRAL INDUSTRIES 21.25:1 930,279 Scrip
Key Economic Indicators May; Prime Lending Rate-9.28 percent Ave. Wtd. Deposit Rates-7.57 percent Ave. Wtd. Fixed Dep. Rates-9.26 percent CCPI Inflation Y-o-Y percent (Base 2013)-5.2 percent.
Point of View
An extended rally in domestic equities pushed the ASPI above the key psychological mark of 5,000 points this week as the benchmark index gained ~173 index points or 3.5 percent W-o-W to close at 5,163.35 points. Equity markets opened on a positive note, gaining ~56 points on Monday supported by an uptick in heavyweights JKH, COMB, and LOLC amid stronger retail-driven momentum. Consequently, the benchmark index crossed the 5,000 mark for the first time since mid-March at its close on Monday. This week’s gain on the index was predominantly supported by index heavyweight JKH amid an announcement stating that the International Finance Corporation had entered into a long-term financial agreement with the Group to support its investment pipeline.
saRenewed investor confidence in the blue-chip consequently led JKH to rise 9.6 percent W-o-W to Rs. 128.20, contributing 31.63 index points or 18.3 percent to the total market gain for the week. Furthermore, this week’s ~173 point gain helped trim the YTD loss on the ASPI to 15.5 percent.
Activity levels on the Colombo Bourse fell marginally however with average daily turnover levels amounting to Rs. 1.40Bn (cf. Rs. 1.42Bn last week) as local HNI and institutional participation remain muted this week. Consequently, crossings contributed a mere 11 percent to total turnover for the week (cf. last week’s 22 percent). Interest remained concentrated mainly on Hemas Holdings (32 percent of the total crossing) and select Banking sector stocks (COMB, HNB, & NTB accounted for 41 percent of total crossings this week).
Meanwhile, the foreign sell-off on Sri Lankan continued this week albeit at a slower pace, with net foreign outflow for the week totaling to Rs. 1.48Bn relative to a net outflow of Rs. 2.65Bn last week. This week’s net selling position on equities increased the YTD outflow from the Colombo Bourse to Rs. 19.8Bn. Markets in the week ahead are likely to take cues from further economic and political developments.
Trade Deficit Widens as Exports Fall Sharply
Sri Lanka’s trade deficit widened in Apr’20, to $840Mn from a deficit of $797Mn in Apr’19 as a result of a sharp decline in export earnings (-64.6 percent Y-o-Y) compared to a drop in import expenditure (-29.6 percent Y-o-Y) during the month. The drop in exports was largely due to disruptions in domestic production and export-related services caused by a nationwide lockdown during the month amid containment measures taken by global value chain hub regions. Consequently, export earnings fell from $798Mn in Apr’19 to $282Mn in Apr’20 with all major export categories recording significant declines (particularly in textile & garments, rubber products, and tea).
Meanwhile, import expenditure also experienced a decline in Apr’20 led by a significant fall in intermediate and investment goods amid import restrictions, an island-wide curfew, and lower commodity prices due to the Covid-19 pandemic. Consequently, import expenditure fell from $1.6Bn in Apr’19 to $1.1Bn in Apr’20 led by lower expenditure on fuel (due to lower import volumes and crude oil prices). In terms of service inflows.
Meanwhile, the significant outflow from capital markets moderated in Apr’20 as net outflows from Government securities amounted to $90Mn (cf. a net outflow of $261Mn in Mar’20 in the aftermath of the pandemic) while no foreign flows were recorded in equity markets due to the suspension of trading from mid-Mar’20.
Meanwhile, long term loans to GoSL created inflows amounting to $137Mn in Apr’20. Gross official reserves at the end of Apr’20 stood at $7.2Bn (cf. $7.5Bn in Jan’20) while the LKR depreciated ~2.8 percent against the USD so far this year, recovering from a sharp decline in Apr’20.
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