Friday, 22 March 2013

Quote for the day

“If stock market experts were so expert, they would be buying stock, not selling advice.” - Norman R. Augustine

Colombo Bourse Sturdy despite local and foreign uncertainties.....

The week concluded on a positive note with both indices ending up in the green. The All Share Price Index rose 64.4 points to close at 5,768.9 points (1.1% WoW), while the S&P SL20 index rose by 50.3 points to close at 3,312.7 points (1.5% WoW). The ASI rose mainly on the back of the gains made by John Keells Holdings (3.3% WoW), Nestle Lanka (3.7% WoW), Hatton National Bank (5.5% WoW), Commercial Leasing & Finance (8.9% WoW) and DFCC Bank (5.8% WoW). 

Indices at the Colombo Bourse continued to sustain its upward momentum during the week with bargain hunters becoming active on mid to large cap counters. This positive momentum was achieved despite the unfavourable market conditions witnessed locally, such as the verdict of the United Nations Human Rights Council (UNHCR) and the hike in the yields of the treasury securities. Moving our attention to world stock markets, European stocks continued to tumble as the region continued to increase the pace of its downturn due to the financial instability witnessed in cash-strapped Cyprus while the latest German manufacturing data showed a contraction for the month of March. Reaffirming this MSCI Europe Index witnessed WoW dip of -1.5% as at Thursday. The US markets also followed its European counterparts and took a breather after the rally witnessed in the previous 2 weeks. Although the US economy has demonstrated signs of recovery, analysts believe that European concerns could continue to wound the US economy going forward. These developments could presumably be one of the reasons for the active foreign participation in the Colombo bourse which has become attractive due to its relatively low correlation with developed markets and its attractive valuations. 

Activities in the Colombo bourse was predominantly dominated by institutional, foreign and high net worth investor interest on mid to large cap counters. Conglomerate John Keells Holdings backed by heavy institutional investor play during the week, propelled itself to become the main turnover generator adding a circa 29% to the total turnover. Premier in the insurance sector Union Assurance also joined the top turnover calibre on the back of a large crossing witnessed in the last trading day. 

Further, Bank, Finance & Insurance sector counters such as Commercial Bank of Ceylon, Hatton National Banka and National Development Bank witnessed institutional and high net worth interest during the week with sector contributing circa of 44% the turnover. Diversified sector also made a healthy contribution of 36% to the total turnover which was primarily energised by the crossings witnessed in John Keells Holdings. Hence Bank, Finance & Insurance sector and Diversified Sector led the turnover during the week with a cumulative contribution of 80% to the total turnover. 

Top contributors to the weekly volume consists of PCH Holdings, PC House, Commercial Leasing & Finance and East West Properties .The average daily turnover for the week was LKR705.1 mn whilst the average daily volume was 27.1mn shares. 

Significant foreign investor interest was observed over the week with foreign purchases amounting to LKR1,404.7 mn, whilst foreign sales amounted to LKR725.7 mn. Market capitalisation stood at LKR2217.8 bn, and the YTD performance is 2.2%.
Source: Asia Wealth Management research