The Bourse ended the week on a positive note as the ASPI increased by 76.80 points (or +1.54%) to close at 5,065.30 points, while the S&P SL20 Index also increased by 8.39 points (or +0.39%) to close at 2,161.89 points.
JKH was the highest contributor to the week’s turnover value, contributing LKR 0.49Bn or 11.04% of the total turnover value. People’s Leasing followed suit, accounting for 7.99% of turnover (value of LKR 0.36Bn) while HNB contributed LKR 0.31Bn to account for 7.01% of the week’s turnover. Total turnover value amounted to LKR 4.47Bn (cf. last week’s value of LKR 5.17Bn), while the daily average turnover value amounted to LKR 0.89Bn (-13.63% W-o-W) compared to last week’s average of LKR 1.03Bn. Market capitalization meanwhile, increased by 2.33% W-o-W (or LKR 54.32Mn) to LKR 2,383.78Bn cf. LKR 2,329.46Bn last week.
Liquidity (in Value Terms)
The Banks Industry Group was the highest contributor to the week’s total turnover value, accounting for 29.86% (or LKR 1.33Bn) of market turnover. Industry Group’s turnover was driven primarily by HNB, Sampath, Commercial, HNB [NV] & DFCC Banks which accounted for 81.57% of the sector’s total turnover. The Capital Goods Industry Group meanwhile accounted for 20.04% (or LKR 0.90Bn) of the total turnover value, with turnover driven primarily by JKH which accounted for 55.08% of the sector turnover. The Materials Industry Group was also amongst the top sectorial contributors, contributing 16.42% (or LKR 0.73Bn) to the total turnover, with turnover driven primarily by Tokyo Cement & Tokyo Cement[NV] Investments accounting for 51.00% of the total turnover.
Liquidity (in Volume Terms)
The Materials Industry Group dominated the market in terms of share volume, accounting for 22.07% (or 63.30Mn shares) of total volume, with a value contribution of LKR 0.73Bn. The Diversified Financials Industry Group followed suit, adding 15.99% to total turnover volume as 45.84Mn shares were exchanged. The Industry Group’s volume accounted for LKR 0.54Bn of total market turnover value. The Food, Beverage & Tobacco Industry Group meanwhile, contributed 44.32 Mn shares (or 15.46%), amounting to LKR 0.25Bn.
Top Gainers & Losers
Amana Life was the week’s highest price gainer; increasing 53.3% W-o-W from LKR6.00 to LKR9.20 while Blue Diamonds [NV] (+50.0% W-o-W), Union Chemicals (+28.5% W-o-W) and CIC (+27.1% W-o-W) were also amongst the top gainers. Blue Diamonds was the week’s highest price loser; declining 20.0% W-o-W to close at LKR0.40. Tangerine (-11.1% W-o-W), LOLC Dev Finance (-9.2% W-o-W), and Asia Capital (-7.2% 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 0.79Bn relative to a net outflow of LKR 0.42Bn recorded last week(+90.0% W-o-W).
Total foreign purchases decreased by 57.5% W-o-W to LKR 0.45Bn from a value of LKR 1.06Bn last week, while total foreign sales amounted to LKR 1.24Bn relative to LKR 1.48Bn recorded last week (-15.8% W-o-W). In terms of volume, Aitken Spence & East-West led foreign purchases while People’s Leasing & Dialog Axiata led foreign sales. In terms of value, HNB & JKH led foreign purchases while People’s Leasing & DFCC Bank led foreign sales.
Dividend Announcements
Company DPS (Rs.) Type XD Date; EQUITY TWO 0.85 Final 07-09-2020,PANASIAN POWER 0.10 Second Interim 30-07-2020, CEYLON HOSPITALS (DURDANS) 2.20 First & Final 28-08-2020, LION BREWERY 8.00 Final 09-09-2020, KELANI CABLES 4.50 Interim 04-08-2020, BANSEI ROYAL 0.50 First & Final 26-08-2020, SWADESHI 1.00 First & Final 07-09-2020, Company Proportion Shares to be Issued Type, AMANA BANK 1:25.00 100,055,621 Scrip
Key Economic Indicators June; Prime Lending Rate- 8.78%, Ave. Wtd. Deposit Rates-7.38%, Ave. Wtd. Fixed Dep. Rates-9%, CCPI Inflation Y-o-Y % (Base 2013) 3.9%.
Point of View
Domestic markets continued to climb this week amid some selling pressure as fears of a second wave eased due to a drop in the number of reported COVID-19 cases.
The benchmark index began this week on a positive note, gaining ~50 points on Monday to surpass the key 5,000 mark as i) a decline in the number of new cases, and ii) a considerable recovery in exports for June buoyed investor sentiment. Markets, however, experienced some selling pressure over Tuesday and Wednesday amid reports from Fitch Ratings stating that the pandemic is estimated to cost rated Sri Lankan corporates Rs. 30Bn in revenue in FY21.
Despite weaker corporate earnings expectations, the prospects of political stability after the conclusion of the upcoming General elections pushed markets back into positive territory towards the end of the week.
Consequently, the benchmark index rose by 77 points or 1.5% W-o-W to close at 5,065.30 points for the week. Despite the overall optimism, however, activity levels on the Colombo Bourse continued to decline with average daily turnover levels for the week falling to Rs. 0.89Bn (14% down from Rs. 1.0Bn last week) as investors opted to remain cautious ahead of the Parliamentary elections in August.
HNI and institutional participation, however, improved as crossings for the week accounted for 16% of total turnover (cf. 8% last week). Select banking sector stocks garnered HNI and institutional investor interest this week, contributing 37% to total crossings despite negative connotations on the sector by both Fitch and Moody’s Ratings Agencies this week.
Meanwhile, several large deals were also recorded in People’s Leasing (23% of crossings) amid foreign selling in the counter during the week. Consequently, net foreign outflow for the week amounted to Rs. 0.79Bn relative to a net outflow of Rs. 0.42Bn last week.
The continuous foreign sell-off from domestic equities has consequently pushed the YTD net selling position to Rs. 23.6Bn.
Markets in the week ahead are likely to take cues from developments concerning the COVID-19 pandemic, Jun’20 earnings season, and upcoming Parliamentary elections.
Fitch: Rated Corps. to Lose Rs. 30Bn in Revenue in FY21
Fitch Ratings on Monday warned that the economic contraction triggered by the COVID-19 pandemic could lead to a ~Rs. 30Bn or a 7% Y-o-Y drop in rated Sri Lankan corporates for FY21.
The impact is further exacerbated to Rs. 40Bn if the country’s two largest telecom companies were excluded. According to the rating agency, 30% of corporates in its portfolio was subject to a negative rating action with a ‘Negative’ Outlook or Rating Watch Negative. Meanwhile, the closure of Sri Lanka’s borders and restrictions on travel globally is estimated to significantly impact Hotel sector revenue and the sector is therefore expected to experience the largest drop in revenue for FY21. Meanwhile, Sri Lanka’s national inflation levels accelerated to 6.3% Y-o-Y in Jun’20 from 5.2% Y-o-Y in May’20, largely driven by higher food prices. Hence, food inflation jumped from 11.1% in May’20 to 13.6% Y-o-Y in Jun’20 amid a significant increase in certain food items. However, non-food inflation remained relatively unchanged at 0.8% Y-o-Y for Jun’20 (0.8% in May’20), has experienced a continuous decline since it reached 7.5% Y-o-Y in Apr’19 last year.
0 comments: