The Bourse ended the week on a negative note as the ASPI decreased by 91.29 points (or -1.55 percent) to close at 5,798.57 points, while the S&P SL20 Index also decreased by 90.68 points (or 3.12 percent) to close at 2,817.76 points.
Turnover & Market Capitalization
Browns Investments was the highest contributor to the week’s turnover value, contributing LKR 0.85Bn or 26.36 percent of total turnover value. Sampath Bank followed suit, accounting for 13.67 percent of turnover (value of LKR 0.44Bn) while Ceylon tobacco contributed LKR 0.27Bn to account for 8.23 percent of the week’s turnover. Total turnover value amounted to LKR 3.23Bn (cf. last week’s value of LKR 3.26Bn), while daily average turnover value amounted to LKR 0.65Bn (-0.92 percent W-o-W) compared to last week’s average of LKR 0.65Bn. Market capitalization meanwhile, decreased by 1.55 percent W-o-W (or LKR 43.20Bn) to LKR 2,737.30Bn cf. LKR 2,780.49Bn last week.
Liquidity (in Value Terms)
The Diversified sector was the highest contributor to the week’s total turnover value, accounting for 31.36 percent (or LKR 1.01Bn) of market turnover. 
Sector turnover was driven primarily by Browns Investment & JKH which accounted for 93.34 percent of the sector’s total turnover. The Banks, Finance & Insurance sector meanwhile accounted for 27.11 percent (or LKR 0.88Bn) of the total turnover value, with turnover driven primarily by Sampath Bank which accounted for 50.43 percent of the sector turnover. The Beverage, Food & Tobacco sector was also amongst the top sectorial contributors, contributing 15.43 percent (or LKR 0.50Bn) to the total turnover, with turnover driven primarily by Ceylon Tobacco & Lion Brewery accounting for 94.85 percent of the total turnover.
Liquidity (in Volume Terms)
The Diversified sector dominated the market in terms of share volume, accounting for 62.01 percent (or 183.13Mn shares) of total volume, with a value contribution of LKR 1.01Bn. The Power & Energy sector followed suit, adding 12.14 percent to total turnover volume as 35.86Mn shares were exchanged. The sector’s volume accounted for LKR 0.15Bn of total market turnover value. The Banks, Finance & Insurance sector meanwhile, contributed 17.66Mn shares (or 5.98 percent), amounting to LKR 0.88Bn.
Top gainers & losers
Tess Agro was the week’s highest price gainer; increasing 25.0 percent W-o-W from LKR0.40 to LKR0.50 while Renuka Hotels (+22.9 percent W-o-W), Lanka Realty (+18.6 percent W-o-W) and Browns Investments (+17.5 percent W-o-W) were also amongst the top gainers. SMB Leasing[NV] was the week’s highest price loser; declining 33.3 percent W-o-W to close at LKR0.20 while Seylan Bank[NV] (-26.6 percent W-o-W), Blue Diamonds (-25.0 percent W-o-W) and Blue Diamonds[NV] (-25.0 percent 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 outflow amounting to LKR 0.40Bn relative to last week’s total net outflow of LKR 0.19Bn (-112.4 percent W-o-W). Total foreign purchases decreased by 12.0 percent W-o-W to LKR 0.60Bn from last week’s value of LKR 0.68Bn, while total foreign sales amounted to LKR 1.00Bn relative to LKR 0.87Bn recorded last week (+15.0 percent W-o-W). In terms of volume, Vallibel Power & Melstacorp led foreign purchases while Tokyo Cement & Access Engineering led foreign sales. In terms of value, DFCC Bank and Melstacorp led foreign purchases while Sampath Bank & Tokyo Cement led foreign sales.
Dividends
Company DPS (Rs.) Type XD Date- CARSON CUMBERBATCH 0.75 First Interim 12-09-2019; LAKE HOUSE PRINTERS 2.00 Final 01-10-2019; MERCANTILE INVESTMENTS 20.00 First & Final 11-09-2019.
Point of View
The equity market rout heightened this week as losses stemming from greater selling pressure led the broad share index to close at a 6-week low of 5,798.57 points resulting in a W-o-W loss of ~91 points while economic and political developments during the week also weighed on investor sentiment. Officials from the finance ministry had indicated this week that Sri Lanka could overrun its budget deficit target by ~100bps this year (cf. a target of 4.4 percent) as spending cuts have not been able to successfully offset shortfalls in revenue.
Renewed political speculation with regard to Presidential candidate nominations by the country’s main political parties also continued to weigh on the index. Furthermore, the benchmark index recorded heavy losses on Friday as greater selling pressure across banking sector stocks led the broad share index to shed ~52 points for the day, adding to the overall weekly drop. Meanwhile, activity levels remained largely unchanged with weekly turnover totaling to Rs. 3.2Bn cf. Rs. 3.3Bn last week.
Average daily turnover for the week was therefore in line with the YTD average daily turnover of Rs. 0.65Bn. However, local HNI and institutional investor interest contributed only 14 percent to the total market turnover (cf. last week’s contribution of 33 percent). Crossings over the week remained concentrated on three stocks, with Sampath Bank and Lion Brewery accounting for 82 percent of total crossing while CTC contributed the remainder. Waning risk appetite for assets in the domestic capital markets amid the weakening of the LKR meanwhile resulted in the foreign sell-off on equities to increase this week. Foreign investors subsequently recorded a net outflow of ~Rs. 0.4Bn cf. a net outflow of ~Rs. 0.2Bn last week. Markets in the week ahead are likely to remain sensitive to any further political developments with regard to Presidential nominations by key political parties.
LKR Lowest in Over 7-Months
Sri Lanka’s currency fell to its lowest in over 7 months, slipping a further 0.8 percent W-o-W against the USD to Rs. 180.9 as the Central Bank cut policy rates for the 2nd time in 4 months amid an exodus of foreign funds from the country’s capital markets in Aug’19. Government securities held by foreigners fell significantly in the last two weeks of August between the 14th and 28th, resulting in a total outflow of ~ Rs. 26Bn for the month. Consequently, the YTD outflow from Government bond markets rose from Rs. 27Bn at the end of Jul’19 to Rs. 54Bn so far this year. Investors have pulled out $13.8Bn from Emerging markets in August amid growing fears of a global slowdown and heightened geopolitical tensions during the month1.
The Governor, however, stated that the CBSL was ready to cope with an outflow of $700 Mn foreign funds invested in Sri Lankan Government securities and the depreciation pressure is expected to be short-lived. Although the LKR experienced a 4.2 percent appreciation against the USD by the end of Q1’19, the performance of the LKR was mixed in the aftermath of the Easter Sunday attacks. Some stabilization was returning to the LKR as it appreciated 0.2 percent against the USD in Jul’19 before slipping 1.7 percent in Aug’19.
Meanwhile, the CBSL announced that Cabinet approval had been obtained to appoint a Steering Committee and a Technical Evaluation Committee for the issuance of a $500 Mn Samurai Bond over the next two months. Urban Inflation levels marginally increased from 3.3 percent Y-o-Y in Jul’19 to 3.4 percent in Aug’19 due to an increase in Non Food inflation (from 5.9 percent Y-o-Y in Jul’19 to 6.2 percent Y-o-Y in Aug’19) while Food inflation levels dropped further (from -2.6 percent Y-o-Y in Jul’19 to -2.8 percent Y-o-Y in Aug’19).
Sources: Central Bank of Sri Lanka, Reuters, Department of Consensus & Statistics
Add new comment