The week concluded with firm interest on blue chips with
both indices dipping marginally week on week. The All Share Price Index lost
33.2 points to close at 5,735.7 points (-0.6% WoW), while the S&P SL20 index
fell 19.1 points to close at 3,293.6 points (-0.6% WoW). The ASI fell mainly on
the back of the losses made by Ceylon Tobacco (-2.1% WoW), Bukit Darah (-2.0%
WoW), Sampath Bank (-2.6% WoW), Carsons Cumberbatch (-1.1% WoW) and Peoples
Leasing & Finance (- 4.4% WoW).
Conclusion:
The dip in both indexes during the week can also be
attributed to the shift in investor interest from counters with moderate growth
prospects towards fundamentally strong blue chip stocks with higher growth
prospects. It is notable that Banking and Diversified sectors have emerged as
the key growth drivers of the Colombo bourse marked by foreign as well as local
interest on key counters such as John Keels Holdings, Commercial Bank, Hatton
National Bank and National Development Bank. The relatively higher interest on
fundamentally strong counters by both retail and high net worth participants
indicates a general change in the level of risk appetite within the market.
This demonstrates a shift of investor interest towards low risk and
fundamentally strong growth stocks that may serve the purpose of a safe haven investment
at a time where the overall direction of the economy is being reassessed by
market forces. We are of the view that these significant changes in market
behaviour indicates that the Stock Exchange is maturing in terms of its level
of responsiveness to general economic conditions.
Commercial Bank backed by both large scale and retail
investors emerged as the main contributor to the turnover during the week
adding circa 20% to the total turnover. Further, Sampath Bank, John Keels
Holdings and National Development Bank together contributed circa 40% to the
weekly turnover demonstrating the major involvement by selected large cap counters
in raising turnover levels in the Colombo Bourse.
Meanwhile, Bank, Finance & Insurance sector counters
attracted heavy investor interest during the week with sector contributing
circa 53% to the weekly turnover. On the other hand, Diversified sector driven
by the crossings pertaining to John Keels Holdings chipped in with a 16%
contribution to the total weekly turnover. Hence Bank, Finance & Insurance sector
and Diversified Sector led the investments spree during the week with a
cumulative contribution of circa 70% to the total turnover.
Top contributors to the weekly volume were Asia Siyaka
Commodities, Commercial Leasing & Finance, PC House, Commercial Bank and Expo
Lanka Holdings .The average daily turnover for the week was LKR 1,110.3 mn up
57.5%WoW whilst the average daily volume was 66.3 mn shares.
Significant foreign investor interest was observed over the
week with foreign purchases amounting to LKR 1,204.2 mn, whilst foreign sales
amounted to LKR 728.1 mn. Market capitalisation stood at LKR 2,205.1 bn, and
the YTD performance is 1.6%.
Institutional and foreign participation keeps the bourse
alive, whilst retailers remain in the side line
The short week’s trading activities at the Colombo bourse
were primarily on a sluggish mode after witnessing a positive momentum during
last week. The bench mark index traded within a very narrow range, to wrap up
the week in red. Retailers were largely adopting a “wait and see” approach
whilst institutional and foreign participation held up the bourse’s
performance. John Keells Holdings continued to be the favourite pick of the
foreign investors, whilst country’s leading banks too grabbed the attention of
high net worth, institutional and foreign investors.
Even though the market activities were lethargic during the
week presumably due to the holiday mood creeping in and the increasing treasury
yields, foreign activity continued to dominate the market with a weekly net
foreign inflow of LKR476mn. It’s noteworthy to mention that the primary reason
behind this is that the Colombo bourse continues to remain as an attractive
frontier market whilst selected blue chip companies future prospectus remains promising.
Further it is noteworthy to mention that Sri Lankan corporate listed debt
market has shown signs of revival following the concessions provided for
corporate bond investments through 2013 budget proposals. Several Banking,
Finance & Insurance sector giants have already taken advantage of this new
development while recently Lion Brewery and Softlogic Holdings have revealed
their plans to raise LKR3bn and LKR750mn respectively through debenture issues.
This would enable firms to borrow at a rate of interest relatively below the
AWLR and more closer to AWFDR depending on the credit rating, allowing firms to
realign their attention towards long term investments and hence further
optimizing the resource allocation of the corporate sector.
Source: ASIA WEALTH MANAGEMENT CO. (PVT) LTD.
