Index closes 10-points shy of key 6500-mark | Daily News

Index closes 10-points shy of key 6500-mark

The Bourse made a turn and ended in the positive territory as the ASPI increased by 13.19 points (or +0.20%) to close at 6,492.06 points, while the S&P SL20 Index also increased by 6.63 points (or +0.18%) to close at 3,628.74 points.

Turnover and market capitalization

Teejay Lanka was the highest contributor to the week’s turnover value, contributing LKR0.62Bn or 23.68% of total turnover value.

JKH followed suit, accounting for 18.69% of turnover (value of LKR0.49Bn) while Distilleries contributed LKR0.24Bn to account for 9.32% of the week’s turnover.

Total turnover value amounted to LKR2.62Bn (cf. last week’s value of LKR3.21Bn), while daily average turnover value amounted to LKR0.52Bn (-34.6% W-o-W) compared to last week’s average of LKR 0.80Bn.

Market capitalization meanwhile, increased by 0.20% W-o-W (or LKR 6.16Bn) to LKR 3,032.14Bn cf. LKR 3,025.98Bn last week.

Liquidity (in value terms)

The Diversified Sector was the highest contributor to the week’s total turnover value, accounting for 27.96% (or LKR 0.73Bn) of market turnover.

Sector turnover was driven primarily by JKH, Hemas Holdings, Softlogic Holdings which accounted for 85.83% of the sector’s total turnover.

The Banking, Finance & Insurance Sector meanwhile accounted for 26.50% (or LKR 0.70Bn) of the total turnover value, with turnover driven primarily by Sampath Bank, HNB Assurance, Seylan Bank [NV],HNB[NV] & Commercial Bank which accounted for 58.60% of the sector turnover.

The Manufacturing Sector was also amongst the top sectorial contributors, contributing 25.46% (or LKR 0.67Bn) to the market driven by Teejay Lanka which accounted for 93.04% of the sector turnover.

Liquidity (in volume terms)

The Banking, Finance & Insurance Sector dominated the market in terms of share volume, accounting for 25.15% (or 27.78Mn shares) of total volume, with a value contribution of LKR 0.70Bn.

The Diversified Sector followed suit, adding 21.87% to total turnover volume as 24.17Mn shares were exchanged.

The sector’s volume accounted for LKR0.73Bn of total market turnover value. The Manufacturing Sector meanwhile, contributed 23.93Mn shares (or 21.66%), amounting to LKR0.67Bn.

Top gainers and losers

Union Assurance was the week’s highest price gainer; increasing 21.1% W-o-W from LKR185.10 to LKR224.10. SMB Leasing gained 20.0% W-o-W to close at LKR0.60.

Samson International(+11.5% W-o-W) and Cargo Boat(+10.1% W-o-W) were also amongst the gainers.

Adam Investments was the week’s highest price loser, declining 33.3% W-o-W to close at LKR0.20 while Radient Gems(-20.0% W-o-W), Renuka Hotels(-20.0% W-o-W), Udapussellawa Plantations(-14.6% W-o-W) were also amongst the top losers over the week.

Foreign investors closed the week in a net selling position with total net outflows amounting to LKR 0.46Bn relative to last week’s total net inflow of LKR 0.25Bn (-283.5% W-o-W).

Total foreign purchases decreased by 43.3% W-o-W to LKR 0.95Bn from last week’s value of LKR 1.68Bn, while total foreign sales amounted to LKR 1.42Bn relative to LKR 1.43Bn recorded last week (-0.96% W-o-W).

In terms of volume SMB Leasing & Softlogic Holdings led foreign purchases while Teejay Lanka & Renuka Agri led foreign sales.

In terms of value Sampath Bank & HNB[X] led foreign purchases while JKH & Teejay Lanka led foreign sales.

Point of view

Sri Lankan equity markets ended the week on a positive note, reversing 3-weeks of consecutive declines.

Despite hitting a one-month low on Monday, the bourse gained ~13 points or 0.20% over the remainder of the week as stronger-than-expected corporate earnings from Index-heavy-weights generated some market interest.

The benchmark ASPI slipped ~34 points or -0.52% (the highest daily drop since March’18) on Monday but regained ~47 points (0.73%) to close the week ~10 points shy of the key psychological mark of 6500.

Monday’s losses were reversed as index heavy-weight CTC gained ~3.31% and contributed 13.6 points to ASPI following its earnings release (CTC recorded ~17% earnings growth supported by a surprise volume growth).

Although markets moved to positive territory over the week, activity levels remained relatively dull during the week as the turnover dropped to Rs.2.6Bn from Rs.3.2Bn a week ago and average daily turnover fell to Rs.0.52Bn (cf. Rs.1.0Bn year to date).

HNI and institutional investors remained on the sidelines over the week, with crossings accounting for just ~29% (Rs.0.8Bn) of the weekly turnover (cf. ~40% last week, and ~44% year to date weekly average).

TJL (Rs.0.5Bn) accounted for ~63% of the block purchases while Distilleries accounted for ~19%.

Foreign investors meanwhile, recorded a net outflow of Rs.0.46Bn for the first time in last 5-weeks reflecting the broader global pattern of declining inflows to EM/FM markets since Feb’18.

The outflows widened the YTD net outflow position on the Bourse to Rs.0.8Bn in (including strategic sale of LOLC for Rs.12.8Bn).

Higher Rupee depreciation continues to remain a major concern for foreign investors, particularly given the LKR’s ~3.4% depreciation so far this year.

Markets in the week ahead are likely to look for cues from the corporate earnings for Mar’18 quarter and further political and economic developments.

LKR depreciates for sixth consecutive week

The LKR continued its slide for the 6th consecutive week, hitting a record low of Rs.158.51 against the USD on Thursday to record an 0.1% depreciation over the week.

The LKR has lost ~3% against the USD so far this year (notably higher than the 1.8% depreciation recorded in the comparable period last year) as a strengthening USD coupled with low exporter dollar conversions, greater security market outflows and lower CBSL intervention has added pressure on the LKR.

This year’s USD strengthening in particular has impacted EM/FM currencies across the board and the LKR remains no exception.

However, recent pressure on the LKR has been notable, prompting the CBSL to assure markets about the currency’s stability.

The CBSL noted that the current pressure on the LKR is unwarranted as underlying fundamentals remain robust with gross external reserves totaling a healthy $9.1Bn and the Real effective exchange rate indices indicating a competitive currency.

The CBSL noted further that foreign inflows over the next few weeks (IMF tranche, final payment for Hambantota port & syndicated loan proceeds) are expected to further boost the country’s reserve position up to $11Bn by mid-June.

The Wall Street Journal meanwhile, noted that despite the LKR coming under pressure from an appreciating USD, the LKR still supports a sound investment in the equity market.

The Journal noted that although the LKR remains vulnerable to further dollar appreciation, Sri Lanka may suffer less than most as it tends to be among the economies least affected by changes in the USD’s value.

The Journal also quoted analyst views that despite its challenging macroeconomic and political picture, Sri Lanka has all the ingredients to be a “break-out” economy which is attractive at its current cheap valuations.


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