Despite starting on a weaker footing, renewed buying interest in Sri Lankan equities led the benchmark index to hit a near 12-month high (6,206.40 on 4th Dec’19) on Friday supported by gains on index heavyweight JKH this week. Furthermore, the CBSL’s decision to keep policy rates steady and news of a fresh loan from ADB amounting to $165Mn to support the pandemic hit SME segment also improved investor sentiment.
Consequently, the Bourse ended the week on a positive note as the ASPI increased by 95.86 points (or +1.58%) to close at 6,180.86 points, while the S&P SL20 Index increased by 43.36 points (or +1.81%) to close at 2,433.63 points. Gains on the benchmark index this week helped pare down earlier losses as the ASPI recorded a YTD gain of 1.2% this week (cf. -0.4% loss last week).
Turnover & Market Capitalization
Total turnover value increased by 6.1% W-o-W to LKR 9.5Bn (cf. last week’s value of LKR 9.0Bn), while daily average turnover value amounted to LKR 1.9Bn (compared to last week’s average of LKR 1.8Bn) as turnover levels continued to improve this week. DIPD and EXPO continued to dominate weekly turnover levels, contributing ~24% to the total market turnover.
Activity construction-related stocks such as ACL and TKYO [NV] was also observed this week amid the Monetary Board’s decision introduce an interest rate cap of 7% on mortgage-backed housing loans to compliment concessional loan schemes proposed during the Budget reading last week.
Retail investors continued to drive activity levels as local HNI and institutional investors remained largely on the side-lines with crossings for the week accounted for a mere 4% of total market turnover (cf. 3% last week). Investor interest mainly focused on LION (30.2% of crossings), DIPD (22.2% of crossings), and JKH (24.2% of crossings).
Dividend Announcements
Company, DPS (Rs), Dividend Type, Date (XD; HAYCARB PLC, 14.00, Third Interim, 08-12-2020; HAYLEYS FIBRE 1.00 First Interim 08-12-2020; HAYLEYS FIBRE 0.45 Second Interim 07-12-2020; SINGER SRI LANKA 3.00 First Interim 23-11-2020; HAYLEYS FABRIC 15.00 First Interim 23-11-2020; MELSTACORP PLC 2.50 First Interim 04-12-2020; KELANI TYRES 5.00 First Interim 03-12-2020.
Key economic indicators October; Prime Lending Rate 6.42%, Ave. Wtd. Deposit Rates 6.1%, Ave. Wtd. Fixed Dep. Rates 6.23%, CCPI Inflation Y-o-Y % (Base 2013) 4%.
Net Foreign Position
The foreign sell-off on domestic equities eased considerably this week as foreign investors were net sellers to the tune of LKR 0.09Bn relative to last week’s total net outflow of LKR 0.3Bn (+69.6% W-o-W). Total foreign purchases increased by 3.4% W-W to LKR 0.57Bn from last week’s value of LKR 0.55Bn, while total foreign sales amounted to LKR 0.66Bn relative to LKR 0.85Bn recorded last week (-22.2% W-o-W). Markets are likely to take cues from Fitch Ratings’ decision to downgrade Sri Lanka’s sovereign rating to ‘CCC’ from ‘B-’.
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