The Bourse ended the week on a positive note as the ASPI increased by 52.22 points (or +1.02%) to close at 5,176.48 points, while the S&P SL20 Index also increased by 47.54 points (or +2.18%) to close at 2,227.19 points.
JKH was the highest contributor to the week’s turnover value, contributing LKR 0.69Bn or 16.11% of the total turnover value. Access Engineering followed suit, accounting for 10.57% of turnover (value of LKR 0.45Bn) while Commercial Bank contributed LKR 0.41Bn to account for 9.55% of the week’s turnover. Total turnover value amounted to LKR 4.29Bn (cf. last week’s value of LKR 5.12Bn), while the daily average turnover value amounted to LKR 1.07Bn (14.55% W-o-W) compared to last week’s average of LKR 1.02Bn. Market capitalization meanwhile, increased by 1.02% W-o-W (or LKR 24.54Mn) to LKR 2,436.24Bn cf. LKR 2,411.67Bn last week.
Liquidity (in Value Terms)
The Capital Goods Industry Group was the highest contributor to the week’s total turnover value, accounting for 33.82% (or LKR 1.45Bn) of market turnover. Industry Group’s turnover was driven primarily by JKH & Access Engineering which accounted for 78.90% of the sector’s total turnover. The Banks Industry Group meanwhile accounted for 27.40% (or LKR 1.17Bn) of the total turnover value, with turnover driven primarily by Commercial Bank, HNB, Sampath Bank & Commercial Bank[NV] which accounted for 80.68% of the sector turnover. The Materials Industry Group was also amongst the top sectorial contributors, contributing 13.98% (or LKR 0.60Bn) to the total turnover, with turnover driven primarily by Tokyo Cement, Tokyo Cement[NV] & Dipped Products accounting for 58.57% of the total turnover.
Liquidity (in Volume Terms)
The Materials Industry Group dominated the market in terms of share volume, accounting for 29.59% (or 70.58Mn shares) of total volume, with a value contribution of LKR 0.60Bn. The Food, Beverage & Tobacco Industry Group followed suit, adding 19.94% to total turnover volume as 47.57Mn shares were exchanged. The Industry Group’s volume accounted for LKR 0.26Bn of total market turnover value. The Capital Goods Industry Group meanwhile, contributed 42.03Mn shares (or 17.62%), amounting to LKR 1.45Bn.
Top Gainers & Losers
Industrial Asphalts was the week’s highest price gainer; increasing 50.0% W-o-W from LKR0.20 to LKR0.30 while Tess Agro [NV] (+25.0% W-o-W), Hapugastenne (+18.6% W-o-W) and Renuka Holdings[NV] (+16.7% W-o-W) were also amongst the top gainers.
SMB Leasing was the week’s highest price loser; declining 33.3% W-o-W to close at LKR0.20. York Arcade (-14.8% W-o-W), Radient Gems (-11.9% W-o-W), and Beruwala Resorts (-11.1% 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 0.88Bn relative to a net outflow of LKR 0.49Bn recorded last week (-79.2% W-o-W). Total foreign purchases increased by 94.2% W-o-W to LKR 0.05Bn from a value of LKR 0.92Bn last week, while total foreign sales amounted to LKR 0.93Bn relative to LKR 1.41Bn recorded last week (-33.9% W-o-W). In terms of volume, Industrial Asphalts & Tokyo Cement led foreign purchases while JKH & People’s Leasing led foreign sales. In terms of value, Lanka Walltile & Tokyo Cement led foreign purchases while JKH & HNB led foreign sales.
Dividend Announcements
Company DPS (Rs.) Dividend Type XD Date CARGILLS PLC 3.20 Final 28-08-2020 HAYCARB PLC 4.00 First Interim 27-08-2020 DIPPED PRODUCTS 1.00 First Interim 13-08-2020 O’NALLY HOLDINGS 0.43 Final 13-08-2020.
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
Sri Lankan equities continued its uptrend for a 3rd consecutive week as the benchmark index gained ~52 points or 1.0% W-o-W as the country’s ruling party secured an unprecedented two- thirds majority in Parliament following the conclusion of the General Elections on Wednesday.
The ASPI gained ~43 points on Tuesday, ahead of elections, as investor sentiment was buoyed by expectations of a stable government with gains primarily driven by buying interest in heavyweights JKH, COMB, and DIAL.
Despite declining 20 points on Election Day due to some profit-taking amid depressed GDP data during the short trading session, markets picked up again on Thursday as the election results began trickling in.
Consequently, the ASPI rose ~30 points to pare down earlier losses supported by gains in blue-chip JKH. Despite opening on a positive note on Friday, the ASPI recorded a marginal decline as investors booked profits during the day.
Meanwhile, activity levels on the Colombo Bourse improved during the holiday-shortened week as average daily turnover increased to Rs. 1.1Bn (cf. Rs. 1.0Bn last week) amid increased participation from retail investors.
However, local HNI and institutional participation remained staunchly on the side-lines this week as crossings contributed a mere 9% the total turnover for the week (cf. last week’s 13%). Interest remained concentrated mainly on JKH (42% of the total crossing), HNB, AEL, HASU, and ACL.
Meanwhile, the foreign sell-off on Sri Lankan equities continued for a 10th consecutive week, with net foreign outflow for the week totaling to Rs. 0.9Bn relative to a net outflow of Rs. 0.5Bn last week. This week’s net selling position on equities increased the YTD outflow from the Colombo Bourse to Rs. 25Bn. Markets are likely to take cues from ongoing earnings releases while investors await clarity on the economic policies of the new government in the weeks to come.
SL’s GDP Contracts 1.6% Y-o-Y in Q1’20
Sri Lanka’s economy contracted by 1.6% Y-o-Y in Q1’20 (relative to a growth of 3.7% Y-o-Y in Q1’19) as the negative effects of the Easter Sunday attack in Apr’19 combined with the impact of the COVID-19 pandemic pushed the economy toward a contraction during the quarter. Peak output conditions before the traditional New Year were stifled by the COVID-19 pandemic as the economy was unable to function at its maximum capacity due to the lockdown conditions towards the end of the quarter.
Even though Sri Lanka was on lockdown for 11 days during Q1’20, the global impact of the coronavirus was felt since the beginning of the year, consequently leading to a slower demand for Sri Lanka’s exports in global markets, delays in raw material acquisition, reduction in tourist arrivals and other supply chain disruptions. Consequently, many sectors in the economy were severely affected including the manufacturing, construction, transportation, and tourism industries.
Agriculture and Industrial activities contracted by 5.6% Y-o-Y (cf. 5.0% Y-o-Y expansion in Q1’19) and 7.8% Y-o-Y (cf. a growth of 3.9% Y-o-Y in Q1’19) respectively. Industrial activities were affected by considerable declines in the ‘Textile’ and ‘Construction’ sector activity.
The ‘Construction’ sector contracted by 16% Y-o-Y (cf. growth of 6.9% Y-o-Y in Q1’19) amid a decline in local cement production and imports while the ‘Textile’ Industry contracted by 13.6% Y-o-Y for the quarter relative to a growth of 1.9% Y-o-Y in Q1’19 amid a slump in apparel exports and order cancellations from key markets in the US and Europe.
Lackluster Industrial and Agricultural activity during the quarter was however offset to an extent by growth in the Services activities albeit at a slower pace as the Services expanded by 3.1% Y-o-Y (cf. 3.7% Y-o-Y in Q1’19) during the Q1’20 owing to growth in the sub-activities of ‘Wholesale and Retail Trade’, ‘Telecommunication’ and ‘IT Programming Consultancy’. Sources:
Department of Consensus Sri Lanka
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