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Rising interest rates and volatility in the exchange rate are not expected to last for long and investors in the country’s bourse should pick up value stocks and rebalance their portfolios, Softlogic Equity Research said last week, as inflation reached a three year high and the rupee strengthened with exporters brining in their dollars.
The Sri Lanka Forex Association said due to quarter end / half yearly close activity was lacklustre in the forex markets with USD trading higher at 133.95 at the open. "However exporter conversions saw it ease lower to close at 133.50-80 and the lowest trade was at 133.70," it said last Friday. During the week, the rupee fell in an all time low of Rs. 134 against the dollar.A week earlier, the rupee had closed at Rs. 132.58 against the greenback and Rs. 109.70 a year ago.
The Average Weighted Prime Lending Rate of the domestic banking sector reached 13.39 percent as at last Friday, from 13.59 percent a week earlier and 9.22 percent a year ago. These rates apply to high net worth individuals and corporate with rates being quoted much higher for ordinary borrowers.
Inflation too peaked to a three year high in June, reaching 9.3 percent from 7 percent a month ago. According to the IMF, inflation could reach 10 percent this year and has urged the Central Bank to keep monetary rates tight for the rest of the year.
"The rising interest rates and the volatile rupee are not expected to last for long with the policy decisions earlier in the year significantly slowing down economic activity in the current environment. The last tranche of the IMF funding and the USD1 bn sovereign bond issue are further supportive factors for the currency and the economy. We believe investors should adopt a positive mind frame and identify the current environment as a golden opportunity to pick value stocks and re-balance the portfolios," it said.
"The bourse underwent a bumpy ride last Friday although on a slow upward trend closely followed by the S&P SL20 as both indices ended marginally on a positive note with gains of 10 points and 6 points respectively. The Milanka counter remained flat with a mere 2 point drop. Amidst the depreciating investor interest, turnover and activity suffered while a single crossing managed to lift turnover to LKR219 mn.
"The sole crossing in Dialog supported the counter reign turnover list as 6 mn shares were dealt with at a price of LKR6.1. Seylan Bank [Non-voting] re-activated as the counter saw heavy accumulation with 1.2 mn shares changing hands. The counter traded between LKR27.6 and LKR28.9 before settling at LKR28.8 at the close of day’s trading.
"National Development Bank, a banking sector counter trading below asset value lost further ground today falling 2.0% despite being on low volumes. The counter now trades at 0.82x PBV an attractive level for value seekers. More banks gained investor interest led by Hatton National Bank and Commercial Bank. Former saw 58k shares changing hands while the counter closed flat for the day. The latter recorded a marginal gain to close at LKR98.8 (+0.1%).
"The speculative counter Citrus Leisure attracted the retail segment as 316k shares changed hands. The Warrant of the counter also gained attention despite both counters ending on negative territory where voting share lost 1.1% while the Warrant lost 10.6%," Softlogic Equity Research said.
Last Friday the ASPI gained marginally to close at 4,965.77 points, up 0.20 percent while the Milanka Price Index of more liquid stocks close down 0.06 percent at 4,383.20 points. The S&P Sri Lanka 20 index gained 0.21 percent to close at 2,817.35 points.
The bourse fell 18.3 percent year-to-date.
Foreign buying amounted to Rs. 30.2 million while sales amounted to Rs. 23.1 million.
http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=55755
The Sri Lanka Forex Association said due to quarter end / half yearly close activity was lacklustre in the forex markets with USD trading higher at 133.95 at the open. "However exporter conversions saw it ease lower to close at 133.50-80 and the lowest trade was at 133.70," it said last Friday. During the week, the rupee fell in an all time low of Rs. 134 against the dollar.A week earlier, the rupee had closed at Rs. 132.58 against the greenback and Rs. 109.70 a year ago.
The Average Weighted Prime Lending Rate of the domestic banking sector reached 13.39 percent as at last Friday, from 13.59 percent a week earlier and 9.22 percent a year ago. These rates apply to high net worth individuals and corporate with rates being quoted much higher for ordinary borrowers.
Inflation too peaked to a three year high in June, reaching 9.3 percent from 7 percent a month ago. According to the IMF, inflation could reach 10 percent this year and has urged the Central Bank to keep monetary rates tight for the rest of the year.
"The rising interest rates and the volatile rupee are not expected to last for long with the policy decisions earlier in the year significantly slowing down economic activity in the current environment. The last tranche of the IMF funding and the USD1 bn sovereign bond issue are further supportive factors for the currency and the economy. We believe investors should adopt a positive mind frame and identify the current environment as a golden opportunity to pick value stocks and re-balance the portfolios," it said.
"The bourse underwent a bumpy ride last Friday although on a slow upward trend closely followed by the S&P SL20 as both indices ended marginally on a positive note with gains of 10 points and 6 points respectively. The Milanka counter remained flat with a mere 2 point drop. Amidst the depreciating investor interest, turnover and activity suffered while a single crossing managed to lift turnover to LKR219 mn.
"The sole crossing in Dialog supported the counter reign turnover list as 6 mn shares were dealt with at a price of LKR6.1. Seylan Bank [Non-voting] re-activated as the counter saw heavy accumulation with 1.2 mn shares changing hands. The counter traded between LKR27.6 and LKR28.9 before settling at LKR28.8 at the close of day’s trading.
"National Development Bank, a banking sector counter trading below asset value lost further ground today falling 2.0% despite being on low volumes. The counter now trades at 0.82x PBV an attractive level for value seekers. More banks gained investor interest led by Hatton National Bank and Commercial Bank. Former saw 58k shares changing hands while the counter closed flat for the day. The latter recorded a marginal gain to close at LKR98.8 (+0.1%).
"The speculative counter Citrus Leisure attracted the retail segment as 316k shares changed hands. The Warrant of the counter also gained attention despite both counters ending on negative territory where voting share lost 1.1% while the Warrant lost 10.6%," Softlogic Equity Research said.
Last Friday the ASPI gained marginally to close at 4,965.77 points, up 0.20 percent while the Milanka Price Index of more liquid stocks close down 0.06 percent at 4,383.20 points. The S&P Sri Lanka 20 index gained 0.21 percent to close at 2,817.35 points.
The bourse fell 18.3 percent year-to-date.
Foreign buying amounted to Rs. 30.2 million while sales amounted to Rs. 23.1 million.
http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=55755
