Markets loses ground with both indices recording week-on-week losses

Weekly Market Focus By Lanka Securities Research

On Monday, market closed in red with both indices ending with negative returns. ASI closed at 6,451.68, down by 11.38 points (-0.18%YoY) and S&P SL 20 Index closed at 3,635.59, down by 10.73 points (-0.29%). Market turnover was LKR 750m. United Motors with LKR 288m and Ceylon Tobacco with LKR 76m topped the turnover list today with the help of two crossings. John Keells Holdings recorded the third highest turnover of LKR 45m. Nation Lanka Finance was the heavily traded stock of the day. Renewed interest in plantation sector was seen during the day and counters such as Maskeliya, Madulsima, Horana and Watawala Planations were among the actively traded stocks.

Foreign participation was 31 percent and foreign investors were net buyers with a net foreign inflow of LKR 342mn. Cash map was 57.7 percent
Colombo Stocks closed with mixed results on Tuesday. ASI dropped marginally by 2.02 points to close at 6,449.66 (-0.03 percent) while S&P SL 20 Index ended at 3,645.90, up 10.31 index points (+0.28 percent). Daily market turnover was LKR 1.0bn. Commercial Bank with LKR 418mn, John Keells Holdings with LKR 87mn and Haycarb with LKR 76mn topped the turnover list. Several crossings were recorded in Commercial Bank and Haycarb. The aggregate value of the crossings accounted for 42 percent of the total market turnover. Abans Electricals (up by 20 percent), Chevron Lubricants (up by 6 percent) and Cargo Boat (up by 13 percent) were the mostly traded stocks during the day.

Foreign participation was 31 percent and foreign investors were net buyers with a net foreign inflow of LKR 439mn. Cash map was 54.4 percent.Colombo Bourse ended lower on Wednesday with both indices closing with negative returns. ASI dropped by 26.82 points (-0.42 percent) to end at 6,422.84 while S&P SL 20 Index ended at 3,635.05, dropped 10.85 points (-0.30 percent). Daily market turnover was LKR 818mn. 4.7mn shares of Dialog Axiata at LKR 9.30 per share, 0.6mn shares of Chevron Lubricants at a price of LKR 375.00 per share and 0.3mn shares of Ceylon Tobacco at a price of LKR 1,000.00 per share changed hands as crossings representing 37 percent of the total turnover value. Accordingly Chevron Lubricants with LKR 276mn, Ceylon Tobacco with LKR 54mn and Dialog Axiata with LKR 50mn were the top contributors to the market turnover. Furthermore Chevron Lubricants emerged as the mostly traded stock during the day followed by Touchwood Investments, Nation Lanka Finance and Kelani Tyres.

Foreign participation was 34%. At the end of the trading foreign investors were net buyers with a net inflow of LKR 314mn. Cash map ended at 55.3%.
On Thursday, stock market ended on a negative note for the fourth consecutive trading day. ASI dropped sharply by 50.46 points to end at 6,372.38 and S&P SL 20 Index declined by 38.71 points to close at 3,596.34.

Daily Market turnover was LKR 1.4bn. Hatton National Bank with LKR 352mn, Commercial Bank with LKR 263mn and John Keells Holdings with LKR 111mn topped the turnover list for the day. Total value of the crossings accounted for 62% of the daily turnover. Chevron Lubricants, Kothmale Holdings and Tokyo Cement non-voting were the mostly traded stocks during the day. 12.5mn shares which accounted for 10.4% of the issued quantity of Ceylon & Foreign Trades changed hands today at a price of LKR 8.00 per share. 468,500 shares of Kothmale Holdings changed hands in a single crossing at LKR 55.00 per share. The “most likely” seller of this quantity is Janashakthi Insurance Plc, the second largest shareholder of Kotmale Holdings. Further, the third largest shareholder Mr. P S Mathavan who is also a director of the company sold his stake of 281,800 shares at a price of LKR 55.00 per share. The buyer was the parent company, Cargills Quality Foods. Stock hit an intra-day high of LKR 58.00 and closed at LKR 53.40, up 15.6%.

Foreign participation was 34%. At the end of the day foreign investors were net buyers with a net inflow of LKR 552mn. Cash map ended at 57.3%. The bourse wrapped up its weekly operations on a negative note as the indices lost ground for the fifth consecutive day on profit booking. ASI closed at 6,307.43 down by 64.95 point while S&P SL 20 Index closed at 3,550.47 down by 45.87 points.

The market turnover was LKR 883.9mn. Cargille Ceylon was the top contributor to the turnover (LKR 246.6mn) followed by Commercial Bank (LKR 120.4mn) and Carsons Cumberbatch (LKR 89.0mn). Most actively traded counters for the day were Laugfs Gas – nonvoting, Horana Plantations and Kelsey Developments. Foreigners were net buyers of LKR 292mn worth of shares and the foreign participation accounted for 30% of the market activity. Cash map for the day was 48%.

Play On JKH
Different reasons were given by stockbrokers in regard to the vicissitudes of the stock market, where it has fallen week on week (WoW), despite ‘strong’ foreign buying on selected blue chip stocks.

One said it was due to alleged price manipulation of blue chip JKH by certain miscreants who had taken the price of this stock artificially up on the back of foreign interest and then had dumped it.

The share price of JKH on Thursday fell by Rs 6.20 to Rs 273.20 over its previous day’s close. The following day Friday it followed suit by falling by another Rs 5, a source alleged, while two other index heavy stocks, namely Tobacco and Caltex also fell.

“It is however not foreigners who are fooled by this price manipulation of JKH, but locals,” the source said.

JKH is considered as the trendsetter in the market, he said. When it falls, then others follow suit, he said.

Another source however said that the fall of JKH was due to profit taking by retailers.

Penny Stocks
However, these alleged manipulators who previously played on penny stocks, have withdrawn their interest in second tier stocks at the present, a source said.

Another attributed the fall in the bourse due to a correction. “I don’t think the bourse can fall by more than another 50 points,” he said on Thursday, after it (ASPI) fell by 50.46 points (0.79%) on that day, whilst falling by another 64.95 points (1.02%), according to CSE data, on Friday. It has now bottomed out, the source said.

On the previous day Thursday, the fall was due to the drop in prices of certain index heavy stocks, which had also been the case in the past few days, whilst continuing in the same vein on Friday, he said.

On Thursday, it was specifically due to the fall of index heavy JKH, CTC and Caltex, which was also the reason for its fall on Friday (June 7), the source said.

Storm In A Teacup
In the case of CTC, its Thursday’s depression was caused by the decline in the price of only a few shares, he said. Such is the weight that such stocks have on market indices, the source said.

There is however hardly any day trades taking place. Day trades don’t occur in a falling market, he said.

But foreign interest in the bourse is strong and visible, that’s the silver lining, the source said.

The bourse since the beginning of the year and up to Thursday (June 6) has seen a net foreign inflow of Rs 15.3 billion. Even on the following day Friday, foreign buying was visible, this time in Cargills and Commercial Bank, the source said. Friday’s foreign inflow figures were not immediately available.

And since the beginning of the year (i.e., from 31.12.12.) and up to Friday, the ASPI has grown by 11.8% to 6,307.43 points and the S&P SL 20 Index by 15.1% to 3,550.47 points, according to CSE data. Meanwhile shareholder wealth (market capitalization) since 31.12.12.and up to Friday has had grown by 11.7% to Rs 2,422.1 billion.

However, WoW and Up to Friday, the ASPI has fallen by 2.4% and the S&P SL 20 Index by 2.6%. Meanwhile, market capitalization (shareholder wealth) WoW has had fallen by 2.4%.

And from 23.5.13 (Friday, May 24 was a Vesak Poya holiday for the bourse) to Friday (June 7), the ASPI has had declined by 2.8% and the S&P SL 20 Index by 3.2%, while market capitalization in the review period has had fallen by 2.8%.

Foreign Funds
But foreign funds are yet looking at the bourse. They are bullish about the Sri Lankan market, the source said. They are looking at selected, index heavy blue chip stocks to make their investments, the source said.

That’s what’s driving the market.

The play is on the blue chips, not on the penny stocks, he said.

Corruption is not an issue as far as foreign investors are concerned, corruption is a worldwide phenomenon, the source said. The low interest rate regime prevailing in First World economies is another reason for investment funds to seek after markets such as Sri Lanka, he said. Because of them the market is bullish.

The locals however have a different set of interest when they look at the market, the source further said.

They look at the market vis-à-vis the returns they may get from the fixed income market, he said.
Local retailers are however out of the market, the source said. There is no interest in the market for penny stocks. Trading is not taking place.

“We however don’t see the momentum which was there in the market in the latter part of 2009 as well as in 2010 and 2011, which were then largely driven by penny stocks, the source said.

1Q Performance

While it’s true that the blue chips didn’t have a great first quarter (1Q) in the current year, it’s however too early to comment on their performance for the rest of the year, he said. Taking the 1Q performance and extrapolating it for the rest of the year is wrong, the source said.

But another source said that the recent hike in electricity rates was going to impinge upon corporate earnings. The source also said that declining gold prices were also going to hit banks, which have an exposure to the pawning market.

Recent foreign investments however have a focus on a couple of blue chip banks. On Thursday it also centred round Commercial Bank and HNB, he said.

But in the fixed income market, interest rates have had come down by a few 100 basis points, the source said. However, the question is whether the interest rates have had come down naturally or artificially, he said. If interest rates are kept artificially low it’s not sustainable, sooner or later the lid will come off, the source said.

The issue is whether inflation is really coming down, even the IMF has raised concerns over the same, the source said.

High inflation is a dampener for interest rates to come down, because the fixed income market, mainly dominated by banks will then try to offer higher interest rates with a premium over inflation in order to induce the investor in to the fixed income market. And a high interest rate environment is also a stumbling block to investments due to higher borrowing costs, similar to a commodity in the real economy becoming too expensive to the consumer, thereby impeding investments.

Further, a high inflationary regime hits the poor and the fixed income earner the hardest.
http://www.thesundayleader.lk/2013/06/09/foreigners-uplift-bourse-fall-has-bottomed-out/

http://www.sundayobserver.lk/2013/06/09/fin51.asp

Stock Market Review for the Week Ended 07th Jun 2013:

After a relatively positive previous week, the Colombo Bourse closed on Monday under a relatively lackluster sentiment. Markets closed in red with both indices slipping yielding negative returns with ASI closing at 6,451.68, down by 11.38 points (-0.18% YoY) and S&P SL 20 Index closing at 3,635.59, down by 10.73 points (-0.29%). Total market capitalization was recorded at LKR 2,477 Bn while foreign investors continued to act as net buyers for the day with a net foreign inflow of LKR 342 Mn. A daily market turnover of LKR 750mn was recorded for the day.

On Tuesday, the Colombo Stock market closed under mixed results as the main index ASI dropped marginally by 2.02 points to close at 6,449.66 (-0.03%) while the more liquid S&P SL 20 Index ended at 3,645.90, up 10.31 index points (+0.28%). A daily turnover of LKR 1 Bn was recorded for the day. Foreign investors were net buyers with a net foreign inflow of LKR 439mn whilst a market capitalization of LKR 2,477 Bn was recorded for the day.

A daily market turnover was recorded at LKR 818mn on Wednesday as both indices closed in red as the ASI dropped by 26.82 points (-0.42%) to end at 6,422.84 while S&P SL 20 Index ended at 3,635.05, dropped 10.85 points (-0.30%). Foreign investors were net buyers on Wednesday with a net inflow of LKR 314mn and a market capitalization of LKR 2,466 Bn was recorded for the day.

Colombo Bourse closed red for the fourth consecutive day especially due to profit taking by local retail traders. ASI dropped heavily by 50.46 points to end at 6,372.38 and S&P SL 20 Index declined by 38.71 points to close at 3,596.34 and a daily turnover was recorded at a solid LKR 1.4bn. A market capitalization of LKR 2,447 was recorded for Thursday. Foreign investor interest persisted throughout the day as foreign investors remained as net buyers with a net inflow of LKR 552mn topping the year-to-date net inflow figure over the LKR 15 bn mark.

As the week concluded, both indices came spiraling down by Friday. The main ASI declined by 64.95 index points (-1.01%) to close at 6,307.43 points and the more liquid S&P AL 20 index declined by almost 50 points (45.87) a decline of 1.27%. Market turnover was recorded at LKR 883 Mn while foreigners continued to hold ground as net buyers recording a net foreign inflow of LKR 291 Mn for the day. Furthermore, a market capitalization of LKR 2,449 Bn was recorded for Friday.

Two crossings took place for the day on Monday by United Motors (LKR 28.8 Mn) and Ceylon Tobacco (LKR 5 Mn) as they topped the turnover list. John Keells Holdings recorded the third highest turnover of LKR 45mn followed by Chervron Lubricants with LKR 34.5 Mn and Distilleries with LKR 30.6 Mn. Dunamis Capital and its subsidiary First Capital Holdings gained notable investor interest as First Capital Holdings closed LKR 18.60, an increase of 15% and Dunamis Capital closed at LKR 14.50, up 11%. On Tuesday, shares recording top volumes for the day were Commercial Bank (3.3 Mn shares), Nation Lanka Finance (1.2 Mn shares) and Central Investments and Finance Company (1.2 Mn shares). Several crossings by Commercial Bank (LKR 372.8 Mn) and Haycarb (60 Mn) took place aiding the total turnover of LKR 1.0bn for the day. Consequently, Commercial Bank with LKR 418mn, John Keells Holdings with LKR 87mn and Haycarb with LKR 76mn topped the turnover list. Abans Electricals (up by 20%), Chevron Lubricants (up by 6%) and Cargo Boat (up by 13%) were the mostly traded stocks during the day closing at 52 week high prices. Profit taking continued to take place throughout the day with robust foreign participation of 31% of the total market. Heavy deals took place in Commercial Bank as foreign investors were net buyers for the third successive day.

On Wednesday market witnessed significant price devaluations in large cap counters such as Chevron Lubricants (down by LKR 10.90), John Keells Holdings (down by LKR 1.80) and Hayleys (down by LKR 11.60). Aggregate value of several crossings made by Dialog Axiata (LKR 43.8 Mn), Chevron Lubricants (LKR 225 Mn) and Ceylon Tobacco (LKR 34.9 Mn) amounted to 37% of the total market turnover value. Further, Chevron Lubricants emerged as the mostly traded stock during the day followed by Touchwood Investments, Nation Lanka Finance and Kelani Tyres.

Several blue-chip counters suffered price decreases on Thursday as John Keells Holdings fell by LKR 11.40 (-4%), Ceylon Tobacco fell by LKR 39.60 (-4%) and Chevron Lubricants declined by LKR 30.80 (-9%) contributing negatively to the index performances. Hatton National Bank with LKR 352mn, Commercial Bank with LKR 263mn and John Keells Holdings with LKR 111mn topped the turnover list for the day. It is noteworthy that the few crossings that were posted on Thursday by Commercial Bank, HNB, Kotmale Holdings, John Keells Holdings, Ceylon and Foreign Trades PLC and Ceylon Tobacco amounted to 62% of the daily turnover. Furthermore, Chevron Lubricants, Kotmale Holdings and Tokyo Cement non-voting were the most traded stocks during the day.

The Colombo Bourse plummeted on Friday due to retail traders engaging in profit taking though the prevailing positive sentiment amongst foreigners persisted throughout the day. Several crossings took place in Cargills Ceylon PLC, Commercial Bank and Ceylon Tobacco. Consequently, the highest contributors to the turnover were Cargills Ceylon with a turnover of LKR 249 Mn followed by Commercial Bank with LKR 120 Mn and Carsons Cumberbatch with LKR 88 Mn. Further, the highest traded stocks for the day were Vallibel One PLC with 1.7 Mn shares, Nation Lanka PLC with 1.4 Mn shares followed by Cargills PLC with 1.3 Mn shares being traded conclusively.

(Courtesy: Innovest Investments (Pvt) Ltd – an Investment Management Company licensed by the Securities & Exchange Commission of Sri Lanka)
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=80928

Markets lost ground last week with both indices recording week-on-week losses. The ASPI closed the week at 6,307.43 points, down 2.41% (or 155.63 points) while the S&P SL 20 index declined 2.63% (or 95.85 points) to close at 3,550.47 points.

Commercial Bank dominated this week’s turnover value amid significant foreign interest as the counter accounted for 17.69% (or Rs 0.86bn) of total market turnover. Chevron followed suit accounting for 9.84% (or Rs 0.48bn) of total turnover value while HNB contributed Rs 0.37bn (or 7.61%) to total market turnover. Total turnover value for the week amounted to Rs 4.86bn declining 10.78% W-o-W from last week’s total of Rs 5.44bn. The daily average turnover value was consequently lower, declining to Rs 0.97bn (cf. Rs 1.09bn last week). Market capitalization too declined W-o-W (2.41%), amounting to Rs 2,422.13bn relative to Rs 2,481.84bn recorded last week.

On a sectoral basis, the highest contribution to weekly turnover value stemmed from the Banking and Finance sector which contributed 34.87% (or Rs 1.69bn), amid interest in Commercial Bank and HNB, which accounted for 72.57% of the sector’s total turnover. The Manufacturing sector followed suit, adding Rs 770.49mn (or 15.87%) to the total market turnover, helped by Chevron, which accounted for 61.99% of the sector’s turnover. The Beverage, Food & Tobacco sector meanwhile, accounted for 15.04% (or Rs 730.09mn) of market turnover value.

In terms of volume, the Banking and Finance sector recorded the highest number of shares being traded (30.70%) as 39.34mn shares changed hands over the week. The Manufacturing sector contributed 12.62% (or 16.17mn shares) to the market, while the Diversified sector was also among the top contributors as 15.11mn shares (or 11.79%) were traded over the week.

Swadeshi was the highest price gainer during the week despite just 3 of its shares trading over the week. The counter closed at Rs 7,555.00 to represent a 51.09% gain from last week’s close of Rs 5,000.30.

Abans Electricals gained 18.54% W-o-W to close at Rs 149.00 while Kelani Cables closed at Rs 84.00, gaining 12.00% over the week. Also amongst the week’s top price gainers were Kelsey Developments (up 11.43% W-o-W) and Kelani Tyres (up 9.45% W-o-W).

The top price loser for the week was PC Pharma which lost 22.22% to close at Rs 4.20 relative to last week?s close of Rs 5.40.

Multi Finance meanwhile, declined 17.14% W-o-W to close at Rs 23.20 while Ceylon Printers lost 16.62% W-o-W to close the week at Rs 1,500

Markets fell over 100 points this week as selling pressure on index heavy-weight JKH dragged the broader Indices lower.

Overall, markets lacked direction as low retail participation and profit taking strained activity levels and weighed down turnover levels. Persistent foreign buying nevertheless, helped prop markets to an extent. Net foreign inflows to the bourse pushed Y-T-D net foreign inflows over Rs 15.0bn as significant interest in Commercial Bank and HNB helped foreign purchases increase 137.19% W-o-W. Sluggish sentiment however, is likely to prevail in the week ahead.

The Central Bank (CB) held June policy rates unchanged today, maintaining the policy corridor between 7.00% (Repurchase Rate) and 9.00% (Reverse Repo Rate).

The Monetary Authority added that last month’s 50bps policy rate cut has continued to take effect with the relevant financial institutions making the anticipated adjustments gradually. The CB added that other monetary and external sector developments also deem its policy stance as appropriate.

Broad money growth moderated further in April (15.2% vs 15.6% in March) and is expected to make a compositional shift over the remainder of 2013 as public sector borrowing eases and the current lower rates provide private sector credit growth a boost.

On the external front meanwhile, the balance of payments (BOP) has continued to be in surplus thus far with the CB absorbing approx. USD 580mn amid increased earnings from trade in services, workers’ remittances and investment inflows.

The Monetary Authority added that although headline inflation in May rose to 7.3% from 6.4% in April due to electricity price hikes, inflation levels are likely to remain at single digit levels as supply-side constraints ease and demand-side pressures remain muted.
http://www.dailynews.lk/2013/06/10/bus15.asp