JKH continues to dominate market

The market rema-ined dull throughout the week with the 2 indices continuing their drift downwards. ASPI (All Share Price Index) and the MPI (Milanka Price Index) started the week on a negative note by falling 17.7 & 29.4 points respectively on Monday prior to shedding a total of 26.9 & 57.7 points to close the week.

During the week ASPI dropped 1.1% to close at 2422.2 points on Friday while MPI witnessed a fall of 1.71% to close at 3314.9 points at the end of the week’s trading.

JKH continued to retain its dominance in the market by accounting for 37.6% or Rs. 145.9 million of the total market turnover. The counter saw 1.15 million of its shares trade for the week, becoming the third highest volume trader. The stock noticed a 0.78% dip in its share price before winding up at Rs. 126 per share.

Meanwhile it was announced on Friday that JKH was included in S & P (Standard & Poor’s) frontier market index becoming the only stock to represent Sri Lanka. However this failed to attract much investor interest as counter closed trading flat on Friday.

Ceylinco Insurance managed to become the second highest contributor towards the weekly turnover with a total contribution of Rs. 26 million, comprising 6.7% of the total turnover.

The share fluctuated in a wide range during the week reaching a low of Rs. 153.25 and a high of Rs. 180, before closing flat at Rs. 180 per share Week on Week.

Telecom sector counter, Dialog saw 0.56 million of its shares trading for the week while the share price saw a WoW drop of 1.11% to close the week at Rs. 22.25 per share. The company contributed Rs.12.5 million towards the weekly turnover.

Amid the healthy quarterly results HNB succeeded into the fourth position providing Rs. 9.5 million to the market turnover with a total trading of 102,600 shares. HNB witnessed its share peak at Rs. 94.25, however closed the week with a price deterioration of 2.1% at Rs. 93 per share.

Market activity was restricted to thin volumes this week where the market hit its lowest turnover in nearly two and half years’ on Thursday, which amounted to Rs. 44.6 million.

Activity for the week showed a significant 68.3% decline compared to last week, with a weekly turnover of Rs. 387.6 million and an average daily turnover of Rs. 77.52 million.

Foreign purchases for the week amounted to Rs.186.7 million while the sales totalled to Rs.82.5 million resulting in a net inflow of Rs. 104.2 million, down by a substantial 83.3% for the week. Foreign participation during the week was 34.73% on total activity, which was a decline from last weeks 49.46%.

Heavily traded counters during the week were Vallibel, Sierra Cable, JKH Ceylon Glass & Seylan Bank (non voting).

Macro uncertainties dragged indices further in to the negative territory on very thin volumes. However trading opportunities existed in the market as volatility continued throughout the week. Week on Week All Share Price Index (ASPI) lost 26.9 points while the Milanka Price Index (MPI) shed 57.7 points.

We expect the market to remain dull, as investors are likely to continue the ‘Wait and See’ approach adopted by them in recent times.

Thus activity levels would remain low but investors are advised to keep an eye on the possible trading opportunities that could exist in the market place.

Furthermore the corporate earnings released so far for the 1st half of 2007 showed mixed results with most of the highly geared entities getting hit in the back of high interest rate scenario. However companies with strong balance sheets such as JKH, Commercial Bank and HNB have shown positive results despite adversity.

Some of the blue chips such as SLT, DFCC, Sampath and Distilleries are also due to publish their financial results for the quarter ended 30/06/2007 shortly.

We advice investors to keep a close tab on the earnings of these blue chips and accumulate those recording healthy profits with a medium to long-term investment horizon.

HNB Stockbrokers (Private) Limited has the sole copyright for this report and the information and views contained cannot be reproduced or quoted in part or whole in any form whatsoever without the written permission from HNB Stockbrokers (Private) Limited.