Colombo Stock Exchange 2016 Year Review by LSL

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.

Colombo Stock Exchange Market Review – 30th Dec 2016

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Colombo Stock Exchange Trade Summary 30-Dec-2016

Colombo equities closed the final trading day of 2016 with losses amid thin-trading. ASI lost 17.45 index points (-0.3%) to close at 6,228.26 while S&P SL 20 index lost 6.69 index points (-0.2%) to close at 3,496.44.

The highlight of the day was Melstacorp which commenced trading after the share swap with Distilleries. The counter started trading at LKR 65.00, below the indicative price of LKR 69.00 and witnessed heavy trading throughout the session. The counter closed at LKR 59.30, down 14.1%.

The drop in price of Melstacorp affected the broad index performance along with Lion Brewery (LKR 465.00, -3.0%), Ceylon Tobacco (LKR 806.50, -0.6%) and Dialog Axiata (LKR 10.50, -0.9%). Market breadth was equally divided where out of the 198 counters traded today, 68 declined while 66 managed to record gains.

Market turnover was LKR 202mn with the absence of negotiated transactions. The biggest contributions came from Melstacorp (LKR 43mn), John Keells Holdings (LKR 20mn) and Nations Trust Bank (LKR 20mn). 

Apart from Melstacorp, relatively heavy trading was seen in Softlogic Life Insurance (LKR 20.70, +3.5%) and Chevron Lubricants (LKR 157.10, -1.2%). Property Development managed to gain some interest after the announcement of the LKR 15.00 per share interim dividend. The counter closed at LKR 104.50, up 33.8%.

Meanwhile, Overseas Realty increased its shareholding in Mireka Capital Limited to 100% by acquiring remaining 40% shareholding at a total consideration of LKR 3.9bn.

Foreign investors were net sellers with net foreign outflow of LKR 6mn. Top net outflows were seen in Melstacorp (LKR 25mn), John Keells Holdings (LKR 7mn) and Seylan Bank (LKR 5mn) while top net inflow was seen in Nations Trust Bank (LKR 16mn). Foreign investors accounted for 33% of the market turnover.
Source: LSL

Sri Lankan shares fall about 10 pct in 2016; directions on rupee, rates awaited

Reuters: Sri Lankan shares fell on Friday, posting a yearly decline of about 10 percent, in thin trade due to year-end holidays, while investors waited for directions from the central bank on the rupee and interest rates.

The central bank is most likely to keep its key interest rates steady at a monetary policy meeting later in the day, even as some economists expect further tightening to ease pressure on the rupee following a rate hike by the U.S. Federal Reserve earlier this month, a Reuters poll showed.

Speculation over possible depreciation of the rupee and rate hikes weighed on sentiment, stockbrokers said.

The Colombo stock index closed 0.28 percent lower at 6,228.26, declining 9.7 percent in 2016, its second straight yearly fall.

In terms of dollar value, market capitalisation fell 13 percent, making Sri Lanka a worse performer than emerging Asian markets like Malaysia, Thailand, Indonesia and Singapore.

Stockbrokers said factors like failure to attract foreign direct investments and lack of investor confidence due to a reversal in some budget policies weighed on the market this year.

"We are going with positive expectations, though it is going to be a challenging year for all," a stockbroker said asking not to be named.

"Politically the government has to prove its policies while the private sector will see some challenges amid possible volatile external environment."

Foreign investors sold a net 6.4 million rupees of equities on Friday, but purchased a net 633.5 million rupees ($4.24 million) in 2016, compared with a net sell of 4.43 billion rupees last year.

Turnover stood at 202 million rupees, less than a third of this year's daily average of 737.2 million rupees. Last year's daily average was 1.06 billion rupees.

Large cap Ceylon Tobacco Co Plc fell 0.6 percent, while Lion Brewery (Ceylon) Plc lost 3 percent. 

($1 = 149.4000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Subhranshu Sahu)

GREG buys near 10% of Pan Asia Bank for Rs. 614 m

Lanka Century Investments Plc (GREG) yesterday bought a near 10% stake in Pan Asia Banking Corp Plc for Rs. 614 million.

It said the investment as “strategic” in diversifying its investments into the financial sector as part of its future growth strategy.

GREG has interests in Ceylon Leather Products Plc, Dankotuwa Porcelain Plc, Colombo City Holdings Plc, South Asia Textile Industries Lanka Ltd., Royal Fernwood Porcelain Ltd., and Browns Investment Plc . Yesterday’s investment signals its direct equity exposure to the banking sector.

Around 29.257 million PABC shares traded for Rs. 614.15 million accounting for 85% of the day’s turnover at the CSE. The share traded between a high of Rs. 20.40 and a low of Rs. 18.90 before closing at Rs. 19.80, up by 30 cents. The net asset value of PABC is Rs. 22 per share.

The deal, when it took place, triggered some excitement in the market which remained less buoyant due to the seasonal holiday mood.

However, the deal appeared almost like a transfer since the seller was CHC Investments, which is a joint-venture, equally owned by Galle Face Hotel Group fame Sanjiv Gardiner, investor Ajit Devasurendra and diversified family business Hirdarmani.

Tabrobane Holdings and Taprobane Equities control 83% of GREG. CHC Investments owns 57% of Taprobane Holdings.

Major shareholders of PABC include business leader Dhammika Perera (29.9%) and Japan’s Bansei Securities (15%). GREG is now the third largest shareholder. 

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