Turnover & Market Capitalization
Dialog was the highest contributor to the week’s turnover value, contributing LKR 0.10Bn or 18.42% of total turnover value. JKH followed suit, accounting for 15.23% of turnover (value of LKR 0.09Bn) while East West contributed LKR 0.09Bn to account for 15.21% of the week’s turnover. Total turnover value amounted to LKR 0.56Bn (cf. last week’s value of LKR 1.74Bn), while daily average turnover value amounted to LKR 0.19Bn (-51.57% W-o-W) compared to last week’s average of LKR 0.39Bn. Market capitalization meanwhile, increased by 0.38% W-o-W (or LKR26.49Bn) to LKR 2,632.39Bn cf. LKR 2,622.51Bn last week.
Liquidity (in Value Terms) The Banks, Finance & Insurance sector was the highest contributor to the week’s total turnover value, accounting for 20.29% (or LKR 0.11Bn) of market turnover. Sector turnover was driven primarily by Pan Asia, HNB, Sampath which accounted for 57.80% of the sector’s total turnover.
The Diversified sector meanwhile accounted for 20.12% (or LKR 0.11Bn) of the total turnover value, with turnover driven primarily by JKH & Hemas Holdings which accounted for 95.91% of the sector turnover.
The Telecommunications sector was also amongst the top sectorial contributors, contributing 18.45%(or LKR 0.10) to the total turnover, with turnover driven primarily by Dialog Axiata accounting for 99.83% of the total turnover.
Liquidity (in Volume Terms)
Top Gainers & Losers Tess Agro was the week’s highest price gainer; increasing 25.0% W-o-W from LKR0.40 to LKR0.50 while Anilana Hotels(+22.2% W-o-W), Gestetner (+20.6% W-o-W) and Nation Lanka (+20.0% W-o-W) were also amongst the top gainers. Singer Industries were the week’s highest price loser; declining 10.3% W-o-W to close at LKR57.20 while LOLC Finance(-8.3% W-o-W), CT Land (-7.3% W-o-W) and Pegasus Hotels(-5.9% W-o-W) were also amongst the top losers over the week.
Point of view
Investor sentiment turned positive this week as the Broad share index closed the week on a firmer note despite significantly lower trading activity as most investors remained on the side-lines due to the traditional New Year holidays. Market sentiment over the last three weeks has been varied, with the Index gaining for two consecutive weeks in the last week of March and first week of April, before losing momentum last week.
During this week’s holiday-shortened trading week meanwhile, the ASPI gained ~21.1 points or 0.4% W-o-W during the 3-day trading week to close at 5,606.35 points for the week. The benchmark index has gained ~49 point so far this month compared to ~495 point drop recorded during Q1’2019. Buying interest on index heavyweight Ceylon Tobacco contributed ~13.8 points to the gain on the index while interest in Melsatacorp and Cold Stores also contributed to the gain. Activity levels however, continued to decline both due to the shortened trading week and market conditions continued to remain dull. Average daily turnover for the week consequently dropped 51.6% W-o-W to Rs. 0.19Bn (cf. Rs. 0.39Bn last week), significantly below the YTD average daily turnover of Rs. 0.59Bn. Local HNI and Institutional participation meanwhile accounted for ~30% of total market turnover during the week. A large parcel in Dialog accounted for 50% of the total crossings for the week while local HNI and institutional investor interest also focused on JKH, East West Properties and Pan Asia Bank. East West Properties sold its stake in Marriot Weligama on Thursday for a total consideration of Rs. 2.8Bn. Foreign buying interest was visible in East West Properties this week as investors bought 1.7Mn shares. The foreign sell-off on the Colombo Bourse meanwhile eased ahead of the long Easter weekend, with foreign investors recording a net foreign inflow of ~Rs. 0.1Bn cf. a net foreign outflow of ~Rs. 0.3Bn last week. Markets in the week ahead are likely to look for cues from economic developments following the end of the first quarter while activity levels are likely to improve as investors return to the market from an extended holiday.
Trade deficit shrinks on weaker imports
Sri Lanka’s trade deficit narrowed further in Jan’19 as policy measures adopted by the CBSL to curb vehicle and non-essential consumer goods imports continued to impede import expenditure while higher export earnings also supported the decline. The trade deficit consequently fell to $617Mn in Jan’19 (cf. $701Mn in Dec’19) from $1,049Mn in Jan’18. Export earnings in Jan’19 grew 7.5% Y-o-Y to surpass $1Bn for a second consecutive month despite January typically being a low export-earnings month.
Export earnings during the month were driven by higher textile and garment products due to greater demand from the EU and USA as well as non-traditional markets. Earnings from agricultural exports meanwhile recorded a growth for the first time since Feb’18, increasing 1.7% Y-o-Y, led by export earnings from coconut and seafood exports. Import expenditure meanwhile decelerated notably, falling 17.8% Y-o-Y in Jan’19 to $1.7Bn from $2.0Bn in Jan’18. Intermediate goods which accounts for 57.8% of total import expenditure decreased 15.6% Y-o-Y due to a lower import bill as weakened crude oil prices coupled with a drop in import volumes contributed to the decline. Import expenditure of consumer goods meanwhile decreased 31.9% Y-o-Y as CBSL policies aimed at deterring vehicle imports led to a significant 47.9% Y-o-Y drop in vehicle import expenditure.
The CBSL however removed the margin deposit requirement which would be effective from Mar’19 as pressure on the exchange rate continued to ease.
The rupee has appreciated 4.6% against the dollar so far this year. Earnings from tourist arrivals increased 2.2% Y-o-Y to $458Mn but workers’ remittances declined substantially by 25.2% Y-o-Y to $545Mn in Jan’19. The significant outflow from capital markets moderated in Jan’19 as government securities recorded a net outflow of $29Mn (cf. a net outflow of $188Mn in Dec’18) and the CSE recorded a net outflow of $14Mn (cf. a net outflow of $26Mn in Dec’18). Gross official reserves at the end of Jan fell to $6.2Bn after the repayment of the ISB of $1Bn. The issuance of ISBs amounting to $2.4Bn increased reserves to $7.6Bn by the end of March.
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