High net worth and institutional investors help market

Activity low key, turnover modest

The All Share Price Index on the Colombo Stock Exchange rebounded last week on the back of high net worth and institutional buying with the main ASPI gaining 14.39 points week-on-week (WoW) despite recording consecutive daily declines between Monday and Wednesday, Acuity Stockbrokers said in their Share Market Weekly.

The modest increase was attributed to active buying by well-heeled investors towards the end of the week resulting in the ASPI gaining 20.24 points on Friday with crossings contributing over 43 percent of total market turnover, the report said.

"Turnover value (though still modest with daily turnover below a billion rupees during the greater part of the week) consequently increased 13.3% WoW to record a daily average turnover value of Rs.0.84 billion helping to push the year-to-date (YTD) daily average to Rs. 1.4 billion," Acuity said.

"Foreign investors however closed the week in a net selling position as net outflow of Rs. 0.34 billion on Wednesday and Thursday offset net inflows over the remainder of the week."

As a result, the YTD net buying position of foreigners was down to Rs. 21.06 billion from Rs. 21.27 billion the previous week.

"Markets are likely to remain subdued in the holiday-shortened week ahead," the report said.

Although the ASPI was up, S&P SL20 was down 0.30% WoW (12.35 points). Panasia Bank was the biggest turnover contributor for the week accounting for Rs. 643.37 million of the total (15.26%) followed by Lion Brewery, where the ultimate controlling shareholder, Carson’s bought a big block, contributing Rs. 592.3 million (14.05%) and JKH Rs. 569.49 million (13.50%).

The daily average turnover was up to Rs. 843.39 million against the previous week’s Rs. 742.99 million, the report said.

"The ASPI ended 0.22% higher for the week in the midst of subdued turnover levels. Activity in the banking & finance, diversified and beverage, food & tobacco sectors amounted for a majority of the week’s turnover. Foreign participation resulted in a net outflow of Rs. 209 mn for the week," John Keells Stock Brokers said in their weekly market report.
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* GDP momentum continues in Q3

The ASPI closed the week with a gain of 16.23 points (or 0.22%) to close at 7252.60 points. However, the S&P SL20 Index dipped0.30% (or 12.35 points) to close at 4062.79 points.

Pan Asia Banking Corporation dominated total market turnover with a value of LKR 643.37mn, and accounting for 15.26% of the week's total turnover value. Lion Brewery accounted for 14.05% (or LKR 592.32mn) of total turnover value, while JKH - which contributed LKR 569.49mn (or 13.50%) - was the third highest contributor to total market turnover. Total turnover value for the week amounted to LKR 4.22bn relative to last week's value of LKR 3.71bn, representing a 13.51% W-o-W increase. Daily average turnover value amounted to LKR 843.39mn, compared to LKR 742.99mn recorded last week. Market capitalization too, increased 0.24% (or LKR 7.25bn) to LKR 3082.70bn from last week's value of LKR 3075.44bn. The Banking & Finance sector was the highest contributor to the week's total turnover value, accounting for 40.37% (or LKR 1.70bn) of market turnover. Sector turnover was driven primarily by Pan Asia Banking Corporation, Commercial Bank, HNB, People's Leasing, Sampath Bank & Asian Alliance which cumulatively accounted for 74.45% of the sector's total contribution. The second highest sectoral contribution stemmed from the Diversified sector, which contributed 17.61% (or LKR 742.61mn). The sector was helped by JKH which accounted for 76.69% of the sector's total turnover value. The Beverage Food & Tobacco sector was also amongst the top sectoral contributors to the market, accounting for 16.58% (or LKR 699.39mn) of the week's total turnover value. The sector was helped by Lion Brewery which contributed 84.69% to total sector turnover.



The Banking & Finance sector dominated the market in terms of share volume too, accounting for 29.31% (or 61.22mn shares) of total volume, with a value contribution of LKR1.70bn. The Power & Energy sector followed suit as 51.86mn shares (or 24.82%), amounting to LKR 225.93mn changed hands. The Diversified sector meanwhile, contributed 9.66% to the week's total turnover volume as 20.17mn shares changed hands. The sector's volume accounted for LKR 742.61mn of total market turnover value.

Week's Top Gainers & Losers

SMB Leasing (NV) was the week's highest price gainer, increasing 25.00%from LKR 0.40 to close at LKR 0.50.Lanka Ceramic gained 13.91% W-o-W to close at LKR 122.00. Huejay meanwhile, gained 12.54% W-o-W to close at LKR 66.40. Blue Diamonds (NV) and Tea Smallholder were also amongst the week's top price gainers with W-o-W gains of 12.50% and 11.84%, respectively.

Malwatte Plantations (NV) was the week's highest price loser as the stock declined 13.04% W-o-W to close at LKR 4.00, relative to LKR 4.60 last week. Paragon recorded a W-o-W price decline of 13.02% to close at LKR 551.20 while Nuwara Eliya Hotels closed at LKR 1,531.10, representing a W-o-W decline of 10.41%.

Foreign investors closed the week in a net selling position as total net outflows amounted to LKR 0.21bn, relative to total net inflows of LKR 0.15bn last week (-238.55% W-o-W). Total foreign purchases decreased 20.02% W-o-W to LKR 1.31bn from LKR 1.64bn recorded last week, while total foreign sales amounted to LKR 1.52bn, relative to LKR 1.49bn recorded last week (+2.16% W-o-W). In terms of volume Dialog and Renuka Holdings led foreign purchases, while Browns Investments and Renuka Agri led foreign sales. In terms of value, JKH and Commercial Bank led foreign purchases, while Lion Brewery and Chevron led foreign sales.

Point of View

Markets rebounded this week with the main share index gaining 14.39 points W-o-W despite recording consecutive daily declines between Monday and Wednesday. Active buying by HNIs and Institutional investors towards end-week resulted in a 20.24 point gain on the ASPI on Friday, with total crossings contributing 43.4% to total market turnover. Turnover value consequently increased 13.37% W-o-W to record a daily average turnover value of LKR 0.84bn, helping push the Y-T-D daily average to LKR 1.40bn. Foreign investors however, closed the week in a net selling position as net outflows of LKR 0.34bn on Wednesday and Thursday offset net inflows over the remainder of the week. The Y-T-D net buying position on the Bourse consequently declined to LKR 21.06bn relative to LKR 21.27bn recorded last week. Markets are likely to remain largely subdued in the holiday-shortened week ahead.

Pvt. Credit Continues to Recover


GDP growth momentum continued in Q3'14, with output growth recording a 7.7% Y-o-Y increase to LKR 911.06bn (cf. LKR 846.10bn in Q3 2013). Growth was driven by improved performance in the Services sector  and sustained growth in the Industry sector. The Services sector grew 7.0% Y-o-Y helped by a robust performance in sub-segments Trade, Tourism, Transport and Banking, while the Industry sector increased 12.6% Y-o-Y backed by the Manufacturing (+8.8% Y-o-Y) and Construction (+21.0% Y-o-Y) sub-sectors. The Agriculture sector however, recorded a 2.0% Y-o-Y decline in Q3 2014 dragging Q3'14 GDP growth slightly lower (7.7% Y-o-Y in Q3'14 cf. 7.8% Y-o-Y in Q2'14). In its latest outlook on Asia meanwhile, the ADB1 highlighted that growth in developing Asia has lost some momentum in H2'14 but is still roughly in line with its original projections. The group added that while it expects regional growth to expand by 6.1% in 2014E and pick-up slightly to 6.2% in 2015E, the outlook for South Asia remains robust (growth of 5.4% in 2014E and 6.1% in 2015E) helped by better-than expected performance in 2014 in the Maldives and Sri Lanka.
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