Bourse ends 1H up 8%, over Rs. 6 b net foreign inflow

The Colombo stock market ended the first half of 2014 with an encouraging near 8% growth and over Rs. 6 billion in net foreign inflows year-to-date.

As at 30 June, the All Share Index (ASI) of the Colombo Stock Exchange (CSE) was 6,378.62, up by 7.88%, whilst the more liquid S&P SL 20 Index had produced an 8.29% year-to-date return.

Last year the CSE ended with a 4.8% return, ending two years of negative returns previously.

The S&P SL 20 Index was up 5.8% in 2013.

The CSE’s market capitalisation yesterday was Rs. 2.67 trillion, up by 8.66% so far this year.
Another noteworthy development was foreign investors returning to the CSE, with year-to-date net inflow of Rs. 6.25 billion as of 30 June.

Net inflows have managed to post a turnaround after suffering a net outflow of around Rs. 9 billion in April. Continued inflows were on top Rs. 22.7 billion net inflow to CSE in 2013 and Rs. 38.6 billion in 2012, which ended three successive years of net outflows.

Asia Securities last week said the favourable external trade position of the Lankan economy coupled with its historically low domestic inflation and the expected fall in domestic interest rates were likely to further boost long-term prospects of equity trading at the Colombo Bourse.

Acuity Stockbrokers said the Bourse gained to a year-to-date high on Friday pushing past 6,300 levels as high net worth investors and institutional investors continued their accumulation strategy.

Markets since the start of the year have gained 395.45 points, with the recent uptrend driven primarily by active foreign, HNI and institutional buying, while retail activity has remained largely muted.

First Capital Research opined: “We expect investor sentiment to be positive and buying interest to continue keeping the market alive. We expect buying interest to remain strong on value counters led by the manufacturing sector and construction related counters.”

Reuters yesterday quoted unnamed analysts as saying the market would move sideways in the short-term with lesser risk due to lower interest rates, with yields on Treasury bills edging down further on Wednesday at a weekly auction.

“Analysts said foreign buying could continue due to lower inflation after Government data showed annual inflation eased to 2.8% in June, its lowest since February 2012, edging down from 3.2% a month ago,” Reuters report said.

“With low interest rates and low inflation, investors are looking at taking positions in the market due to continued foreign buying,” said a stockbroker, asking not to be named, according to Reuters.
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Thx RB for posting.

I think background set for the long run. Healthy foreign inflow, low interest rate & low inflation, financial sector consolidation etc.

Good luck.