Quote for the day

‘Price is observable and objective while value is perceived and subjective’. – John Murphy

Bourse witnesses across the board revival in sentiment....

Colombo bourse picked up during the week brushing off any negative sentiments that may arise with the significant increase in domestic electricity tariffs. The ASI gained 79.9 points WoW to close at 5,962.2 points (1.4%), whilst the S&P SL20 Index gained 23.3 points WoW to close at 3,359.4 points (0.7%). Indices benefited mainly on the back of the gains made by Ceylon Tobacco (4.4% WoW), Asiri Hospital Holdings (20% WoW), Colombo Land & Development Co (27.5% WoW), Lion Brewery (7.3% WoW) and Chevron Lubricants (6.2% WoW).

Both indexes gained notably during the week amidst the positive trends witnessed in U.S and Asian equity markets. U.S bond yields dropped significantly during the week, indicating the positive sentiment of markets towards the world’s largest economy in the face of current global economic downturn. However, employment and output figures from the Euro zone continued to deteriorate where PMI index fell below 50 for Germany’s industrial output in April indicating contraction. Furthermore, France, Spain, Italy, Portugal, Greece and Cyprus unemployment levels have hit record high levels reaching 10.6%, 27.2%, 11.6%, 17.5%, 27.2% and 14% respectively while the overall unemployment rate for Euro zone economies remain at 12%. Given that EU is U.S’s largest market for her exports, conditions in Europe may affect bilateral trade between the two economic zones in the medium term. However, the continuation of expansionary monetary policy in U.S despite the significant cuts in government spending assisted the rise in U.S markets as opposed to European markets which are engulfed with heavy fiscal tightening.

Upward revision in electricity tariffs is likely to cause a dip in market interest rates and a strengthening of the LKR in the medium run and a further strengthening of the local banking system by improving the asset quality of the two large public banks in the medium term. Sri Lanka’s equity market gained notably during the week partly on account of these developments where the highest contribution was made by the banking, diversified and manufacturing sector counters.

Interest was seen across the board where the week’s turnover level was driven mainly by large cap counters representing a number of sectors such as banking, food & beverages, diversified, land & property, hotels and healthcare. This indicates that buying interest was well spread across both indexes and the positive sentiment has targeted a larger section of the economy. Nevertheless, banking sector counters such as Commercial Bank of Ceylon, National Development Bank, Sampath Bank and Pan Asia Bank contributed circa 20% to the week’s turnover. In terms of the price movement of key sectors, the manufacturing sector witnessed the largest price increase by recording 3.3% WoW gain in the price index while hotels and travels sector increased by 2% WoW. On the back of these developments, the week saw an average turnover of LKR 978.4mn and an average volume of 77.7mn. It is also significant that the volume of shares traded during the week rose by as much as 69.6% indicating the fact that interest on mid and small cap counters have revived and retail participation in the market is gaining in momentum.

Furthermore, Commercial Bank of Ceylon, Lion Brewery, Pan Asia Power, John Keels Holdings, Colombo Land and Development Co and National Development Bank topped the list in terms of turnover during the week.

The week saw foreign purchases amounting to LKR 1,246.6 mn whilst foreign sales amounted to LKR 465.7mn. Market capitalisation stood at LKR 2,284.2bn, and the YTD performance is 5.7%.

Conclusion:

Active participation of investors lifts the ASI to cross 6,000 mark…….
The bench mark index crossed the 6,000 mark on Friday for a short period, whilst the indices made healthy gains for the week on the back of collective contribution made by retail, foreign and institutional investors. The bourse regained momentum with the activities being energized after witnessing profit taking towards the end of the last week. 

Indices trended upwards during the week with majority of the counters ending in the green witnessing substantial price appreciation. Foreign interest was sustained especially in the banking counters where Commercial Bank spearheaded the list, whilst retail favourite counters such as Colombo Land & Development Company, Touchwood Investments, The Colombo Fort Land & Building, and Kalpitiya Beach Resort garnered heavy retail participation. This in turn propelled the ASI to rise sharply with the average weekly turnover being LKR978.4mn.

Further, the Central Bank (CB) revealed that the government crowding out of the private sector has eased for the month of February. Whilst the state borrowing continues to be high, private sector borrowing has witnessed a recovery in February from the slow down witnessed in January. The CB indicated that the government’s reliance on the domestic banking system is likely to come down with the expected adjustments to administratively determined prices and continued fiscal consolidation. It further indicated that the availability of additional funds subsequent to the government’s reduction in borrowings from the banking sector coupled with the options available to the banks to obtain cheap foreign borrowings is likely to stimulate private sector activities by opening doors for new investments. The aforementioned developments coupled with the expected fall in market interest rate are likely to improve equity market activities. Hence, we continue to advice investors to align their portfolios with fundamentally sturdy counters which are trading at attractive multiples and have promising growth prospects.
Source: Asia Wealth Management Research

Quote for the day

"Most people invest and then sit around worrying what the next blowup will be, I do the opposite. I wait for the blowup, then invest." - Richard Rainwater

Top 20 Pitfalls to be avoid in Share Investment / Trading

Following are the top 20 most common investing mistakes which you should avoid:

1 - Putting all your money in one type of investment. If you have all your money tied up in a single investment and something goes wrong, you will lose all your money.

2 - Another mistake investors make is purchasing stocks before their ex-dividend date and then selling them after the dividend is received. In reality, the company's share price would decline on the ex-dividend date by about the same amount of the dividend, and this has absolutely no value for you. But, the dividends received will create a tax liability for you.

3 - Focusing on past performance. Investors usually think that the past performance is a good indicator of future performance but ignoring the fact that best performers can also turn into the losers over a period of time. Past performance is no guarantee of future returns.

4 - Putting too much focus on Number-Based Analysis. Numbers can be used to identify strengths and weaknesses, or to compare various investment alternatives, but numbers alone are not enough in determining an appropriate investing strategy.

5 - One of the biggest investing mistakes that many people make is investing before they are financially ready. To be a successful trader, you should clear up your debts first before using those funds for investment purpose.

6 - Being greedy. This is the most common mistake associated with trading stocks. Don’t be in a hurry to make quick money.

7 - Investing without a plan. It is very important to have a solid plan so that you can be aware of the risks and returns associated with your investment.

8 - Not setting clear goals. A successful investor should set clear and achievable goals with timelines.

9 - Not following the financial plan. Some investors simply invest money on other areas without following the initial plan and this may yield higher risks of losing the money.

10 - Too much diversification. Though portfolio diversification can reduce investment risk, spreading your investment over too many companies will also lead to some problems, you will have too many to properly manage.

11 - One of the most common mistakes that beginners make is forgetting about expenses or not budgeting enough for certain costs.

12 - No patience for potential investment growth. Many investors make the big mistakes of selling a valuable stock too quickly.

13 - Another mistake is to have too much confidence in the ability of your brokers.

14 - Following rumours without doing your own research and analysis.

15 - Timing the market is also one of the common mistakes that many investors make.

16 - Invest in things that you don't understand.

17 - Letting your emotions rule your decisions.

18 - Failing to learn from mistakes.

19 - Focusing only on return.

20 - Being overconfident.
Source: finance learners

Quote for the day

"The beautiful thing about the markets, they don’t like you, they don’t dislike you, they just don’t care. They are there everyday. You want to play, you can play. You don’t want to play, don’t play."- Larry Hite

LSL Market Review 24th Apr 2013

Indices gained considerable ground helped by gains on Ceylon Tobacco Company and Chevron Lubricants. Retail favorite Colombo Land & Development rallied with solid activity. A major shareholder of Panasian Power reduced their stake whilst Hemas power was the buyer. The latter will be expanding its portfolio of power generating sites in effect. Investors speculated on Ceylon Tobacco Company announcing its interim dividend anytime soon. High dividend yielding counters are expected to see price appreciations in the short-term.

ASI gained 50.21 points (0.85%) to close at 5,933.73 and the S&P SL20 index 13.66 gained (0.41%) points to close at 3,358.51. Turnover was Rs. 975.3Mn.

Top contributors to turnover were Panasian Power with Rs. 304.8Mn, John Keells Holdings with Rs. 114.3Mn and Commercial bank with Rs. 71.9Mn. Most active counters for the day were Colombo Land & Development, Touchwood Investments and Agstar Fertilizer.

Notable gainers for the day were Industrial Asphalts up by 18.4% to close at Rs. 249.90, Environmental Resource Investments - warrants up by 13.6% to close at Rs. 2.50 and Amana Takaful up by 13.3% to close at Rs. 1.70. Notable losers for the day were Tangerine Hotels down by 14.9% to close at Rs. 68.10, E.B. Creasy down by 4.9% to close at Rs. 951.00 and Lankem Ceylon down by 4.9% to close at Rs. 154.00.

Cash map for today was 70.22%. Foreign participation was 27.2% of total market turnover whilst net foreign selling was Rs. 161.5Mn.

2013 Country Stock Market Performance

Below is a look at the year-to-date performance for the major stock market indices of 77 countries around the world. Through today, the average country on the list is up 4.09% in 2013, and 49 of the 77 countries (63.6%) are in the green for the year.

Japan now ranks first overall with a gain of 30.53%, but keep in mind that its currency has depreciated significantly this year. In dollar terms, Japan's stock market is up 14.04% YTD. This would still rank it 11th on the list, but it cuts the gains in half. In the G7, the US ranks second behind Japan, followed by the UK. After Japan, the US and the UK, the four other G7 countries are not doing very well. France is up just 0.30% on the year, while Italy, Germany and Canada are all down.

All four of the big BRIC (Brazil, Russia, India, China) emerging markets are down on the year as well. China is doing the best of the BRICs with a YTD decline of 1.19%. India is down 1.32%, while Brazil and Russia are now down double digit percentages. Brazil and Russia are both having very rough 2013s through mid-April.
Source: http://www.bespokeinvest.com