The performance of the final day of the year clearly sums up this year’s performance of Colombo Bourse. Negative returns amid low turnover dominated the market for the most part of the year with the exception of few months in-between.
ASI closed with back-to-back losses with index declining 9.7% in 2016 (-666.24 index points) after the dismal -5.5% performance in 2015. S&P SL 20 index suffered a loss of 3.6% this year.
Daily average turnover fell to LKR 743mn* (-30%YoY) marking the weakest performance since 2009. The attractive returns in the fixed income market drove out the domestic investors while foreign investors were more cautious amid the rising rates elsewhere in the world.
Foreign investors closed the year as net buyers of LKR 2.0bn* worth of shares thanks to several strategic deals in the latter part of the year. With the absence of the domestic investor activity, foreign investor participation shot up to 42% of the year’s turnover marking the highest foreign participation since 2008.
Most of the economic indicators faltered in 2016. Interest rates inclined by 287bps while rupee depreciated nearly 4% creating challenging circumstances for the equity market. The political as well as policy uncertainties and the decelerated economy growth (1-3Q GDP growth at 4%) added to the woes, making it increasing difficult for the equities to outperform the other asset classes.
We believe 2017 to be an equally challenging year for the equities, especially in the first-half. Presence of the above mentioned challenging circumstances may affect the performance in the early part of 2017 but we expect this to smoothen in the latter half. We will discuss our take on the stock market for 1H2017 in our semi-annual report which will be published in January 2017.
*Kindly note that the figures mentioned in the annual review includes the sale of Seylan Bank shares by BOC (LKR 1.3bn) since there is no official announcement from CSE or SEC regarding the cancellation of the transaction yet. Excluding this transaction, the daily average turnover is LKR 737mn and the foreign inflow is LKR 663mn.
ASI closed with back-to-back losses with index declining 9.7% in 2016 (-666.24 index points) after the dismal -5.5% performance in 2015. S&P SL 20 index suffered a loss of 3.6% this year.
Daily average turnover fell to LKR 743mn* (-30%YoY) marking the weakest performance since 2009. The attractive returns in the fixed income market drove out the domestic investors while foreign investors were more cautious amid the rising rates elsewhere in the world.
Foreign investors closed the year as net buyers of LKR 2.0bn* worth of shares thanks to several strategic deals in the latter part of the year. With the absence of the domestic investor activity, foreign investor participation shot up to 42% of the year’s turnover marking the highest foreign participation since 2008.
Most of the economic indicators faltered in 2016. Interest rates inclined by 287bps while rupee depreciated nearly 4% creating challenging circumstances for the equity market. The political as well as policy uncertainties and the decelerated economy growth (1-3Q GDP growth at 4%) added to the woes, making it increasing difficult for the equities to outperform the other asset classes.
We believe 2017 to be an equally challenging year for the equities, especially in the first-half. Presence of the above mentioned challenging circumstances may affect the performance in the early part of 2017 but we expect this to smoothen in the latter half. We will discuss our take on the stock market for 1H2017 in our semi-annual report which will be published in January 2017.
*Kindly note that the figures mentioned in the annual review includes the sale of Seylan Bank shares by BOC (LKR 1.3bn) since there is no official announcement from CSE or SEC regarding the cancellation of the transaction yet. Excluding this transaction, the daily average turnover is LKR 737mn and the foreign inflow is LKR 663mn.
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