Sri Lankan shares fall to 2-wk low in thin trade over political woes

Jan 19 (Reuters) - Sri Lanka's main stock index fell to a more than two-week low on Monday as political uncertainty and lack of clarity on projects started by the previous government weighed on investor sentiment.

Investors also awaited economic policies of the new government.

The main stock index fell 1.96 percent, or 147.18 points, to close at 7,366.68, its lowest since Jan. 2. The losses erased 62.7 billion rupees from the market value on Monday.

"Political uncertainty is still prevailing. Margin calls may lead the market to fall tomorrow as well," said Dimantha Mathew, manager of research at First Capital Equities (pvt) Ltd.

Analysts said investors are concerned about political stability after new President Maithripala Sirisena announced an interim cabinet last week he said would carry out reforms to fight corruption in the 100 days to a parliamentary election.

The main focus of the new government would be to introduce the democratic reforms it promised within the 100-day period, analysts said.

Shares in Commercial Bank of Ceylon Plc, the country's biggest listed lender, fell 4.51 percent, while top conglomerate John Keells Holdings Plc lost 1.45 percent, dragging down the index.

Access Engineering Plc, the main contractor of an expressway project, fell 11.33 percent after the government said it would halt the Chinese-funded northern expressway project pending cost evaluation.

Analysts said the market was closely monitoring the government's bureaucratic appointments to check if they were in line with its pledge of good governance and transparency.

Foreign investors, who bought a net 22.07 billion rupees worth of stocks last year, net bought 80.1 million rupees of shares on Monday.

The day's turnover stood at 859.7 million rupees ($6.5 million), well below last year's daily average of 1.42 billion rupees, stock exchange data showed. 

($1 = 131.7500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

Highest 2014 monthly vehicle registrations in December

Last December witnessed the highest monthly vehicle registrations under most categories for the 2014 calendar year, according to statistics compiled by JB Securities (Pvt) Ltd.

“The duty reductions in the budget in October catalysed the huge surge in imports,” JB Securities CEO Murtaza Jafferjee said.Totally, 4,222 motor cars were registered, almost doubling from 2,419 in November and 1,800 in December 2013 (yoy). Brand new motor car registrations tripled to 1,851 from 672 units in November and 569 yoy. Small car (1000cc) registrations grew to 1,421 from 481 units in November and 244 yoy. Maruti recorded 1,013 units, with 838 Altos, followed by Micro with 386 registrations. The pre-owned car segment increased to 2,371 units, up from 1,747 in November and 1,231 units yoy. Toyota, claiming the majority of the pre-owned cars, increased to 1,553 with 696 Aqua, 407 Axio and 329 Prius units. Honda followed with 766 registrations, with 725 of those being Fits.

An all time high financing share of 63.8 percent was recorded, indicative of credit flowing into cars. The premium segment recorded 98 units, up from 61 in November and 90 yoy. Mercedes maintained the lead with 40 registrations, breaking down into 24 C class, 6 E class and 10 S class units. BMW registrations fell to 12 from 32 yoy. SUVs and crossover registrations increased to 1,599 from 1,369 units in November and 580 yoy.

Honda Vezel dominated the segment with 1,288 registrations, up from 1,122 units in November and none yoy. Mitsubishi recorded 89 units mainly through 68 Outlanders, while 70 Toyotas, 33 of them Prados were included.A record financing share of 66 percent was observed, mainly through Vezels.

Hybrid car and SUV registrations grew to 3,642 from 2,864 units in November and 860 yoy with 2,053 Hondas and 1,461 Toyotas, while 10 electric cars, mainly Nissan Leafs were also recorded. Van registrations increased to 462 from 186 Nov and 182 yoy with Toyota 

Hiace accounting for 248 of the total.

“Finally the ubiquitous school/staff transport vehicle is getting a much needed upgrade.

The reduction in duty rates and cheaper Japanese yen has increased the affordability of these vehicles,” Jafferjee said. Three-wheeler registrations increased to 7,569 compared to 6,917 in November and 5,873 yoy. Bajaj claimed 88.4 percent of the market with Piaggio and TVS following with 6.8 percent and 4.7 percent respectively. The financing share was 92.4 percent. Two-wheeler registrations declined marginally to 37,286 from 38,539 in November up from 13,906 yoy, with a financing share of 28.4 percent.

Jafferjee said that the numbers reflected the previous government’s purchase to provide subsidized motorbikes to government employees.

He added that a drop of 15,000 units monthly could be seen going forward due to some of the normal demand being met by this program. Pickup truck registrations boomed to 728 from 261 in November and 88 yoy.

A government order for 1,000 Mitsubishi L200s, funded through Bank of Ceylon leases contributed with 412 deliveries, while Tata registrations contributed another 214.

Mini truck registrations increased to 1,238 compared to 1,022 November and 1,021 yoy, while lite trucks saw an increase to 336 from 250 in November but down from 408 yoy.

Medium trucks recorded 211 units, up from 173 in November and 187 yoy, while heavy trucks increased to 179 registrations from 127 in November and 130 yoy. Financing share was 52.5 percent, likely pointing to a large institutional or government purchase. Bus registrations also saw an increase to 639 compared to 506 in Nov and 108 yoy. The financing share was a mere 32.4 percent, indicative of government purchases as well. Jafferjee said that traffic on the road is going out of control due to the increase of vehicles from cheaper cost of ownership and cheaper fuel.

“It’s probable that fuel prices will be reduced as per election promises, and the problem will get worse. We urgently need to implement a road tax and/ or congestion tax to make it expensive for private vehicles to be on the roads during peak hours in congested locations in the greater Colombo region,” he said.

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JKH highest contributor in three day trading week

The holiday shortened trading week ended with both indices closing on a decline. The ASPI lost 91.93 points (or 1.21%) to close at 7513.86 points; the S&P SL20 Index meanwhile, declined 0.57% (or 24.47 points) to close at 4248.03 points.

Turnover and Market Capitalization | JKH was the highest contributor to the week’s turnover value with a contribution of Rs 642.34 mn that accounted for 13.15% of total turnover. Commercial Bank followed suit accounting for 12.94% of turnover (value of Rs 631.74mn) while Distilleries Company contributed Rs 468.12mn to account for 9.58% of the week’s turnover.

The daily average turnover value over the three day week amounted to Rs 1.63bn (down 24.80% W-o-W) compared to last week’s four day week average of Rs 2.16bn.

Total turnover value for the week amounted to Rs 4.88bn relative to last week’s value of Rs 8.66bn. Market capitalization too decreased 1.18% (or Rs 38.35bn) to Rs 3200.55bn relative to last week’s value of Rs 3238.90bn.

Liquidity (in Value Terms)

The Banking and Finance sector was the highest contributor to the week’s total turnover value, accounting for 36.38% (or Rs 1.77 bn) of market turnover.



Sector turnover was driven primarily by Commercial, Union, HNB and Sampath which cumulatively accounted for 70.27% of the sector’s total contribution.

The second highest sectoral contribution stemmed from the Diversified sector, which contributed 18.55% (or Rs 902.28mn). The sector was helped by JKH and Hemas Holdings which accounted for 88.33% of the sector’s total turnover value.

The Manufacturing sector was also amongst the top sectoral contributors to the market, accounting for 12.30% (or Rs 598.54mn) of the week’s total turnover value.

Foreign investors closed the week in a net selling position, with daily average net outflows amounting to Rs 17.85mn relative to daily average foreign outflows of Rs 102.80mn recorded last week (+82.64% W-o-W). Daily average foreign purchases increased 137.86% W-o-W to Rs 0.71bn, from Rs 0.30bn recorded last week, while daily average foreign sales amounted to Rs 0.72bn, relative to last week’s value of Rs 0.40bn (+81.16% W-o-W). In terms of volume meanwhile, Commercial Bank and Asiri Hospital Holdings led foreign purchases while Union Bank and Vallibel One led foreign sales. In terms of value, Commercial Bank and Chevron Lubricants led foreign purchases while Distilleries and Union Bank led foreign sales.

The sector was helped by Chevron which contributed 37.39% to total sector turnover.

Liquidity (in Volume Terms)

The Banking and Finance sector dominated the market in terms of share volume too, accounting for 21.59% (or 34.37mn shares) of total volume, with a value contribution of Rs 1.77bn.

The Manufacturing sector followed suit as 29.17mn shares (or 18.32%), amounting to Rs 598.54mn changed hands.

The Power and Energy sector meanwhile, contributed 10.77% to the week’s total turnover volume as 17.15mn shares were exchanged. The sector’s volume accounted for Rs 197.18mn of total market turnover value.

Week’s Top Gainers and Losers

Arpico Insurance which commenced trading this week was the week’s highest price gainer, increasing 17.50% from LKR 12.00 to close at LKR 14.10. Sinhaputhra Finance gained 14.58% W-o-W to close at LKR 220.00. Samson International meanwhile, gained 10.90% W-o-W to close at LKR 115.00. Gestetner and Shalimar were also amongst the week’s top price gainers with W-o-W gains of 10.19% and 8.89%, respectively.

Printcare was the week’s highest price loser as the stock declined 14.62% W-o-W to close at LKR 36.80, relative to LKR 43.10 last week. Tess Agro (NV) recorded a W-o-W price decline of 13.33% to close at LKR 1.30 while Fortress Resort closed at LKR 17.10, representing a W-o-W decline of 11.86%.

Point of View

Markets closed the three-day trading week in negative territory, as profit-taking on selected counters, foreign outflows, and muted retail activity weighed down indices.

The benchmark ASPI consequently recorded consecutive daily declines to end the week 91.93 points down. Volumes too were notably thin relative to last week, with daily average turnover value declining to LKR 1.63bn.

Turnover contribution from off-board transactions too declined, with total crossings accounting for 17.14% of total market turnover. Foreign investors meanwhile recorded net outflows -albeit lower than last week – as net inflows on Monday and Friday failed to offset net outflows of LKR 0.40bn on Tuesday.

Similar market momentum is likely to prevail in the week ahead, as investors adopt a watchful approach ahead of the new Government’s mini-budget to be presented on the 29th of January.

WB upgrades Regional Growth Forecast

The World Bank (WB) meanwhile, upgraded its GDP growth forecast for South Asia adding that a recovery in domestic demand – particularly investment – is likely to help accelerate regional growth. The Bank expects growth in South Asia to reach 6.1% in 2015E (cf. previous forecast of 5.9%) and improve to 6.8% by 2017E.

The Bank also upgraded its growth projection for Sri Lanka, forecasting a real GDP growth of 7.5% in 2015E cf. its previous forecast of 6.9%, while expecting growth to narrow to 6.5% in 2017E.

Near-term growth is expected to be fuelled by higher investment – following the recently held Presidential Election – and increased government spending, while private demand is likely to be supported by continued remittance inflows.

The Bank added however that supply-side bottlenecks, particularly in Sri Lanka where the economy is operating at near capacity, are likely to add pressure on growth.

The Bank meanwhile added that downside risks to regional growth include political tensions, energy constraints and weak business environments.
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Arpico Insurance becomes first listing on CSE for 2015

Arpico Insurance Ltd. was listed on the Diri Savi Board of the Colombo Stock Exchange (CSE) on Friday, 16 January, marking the first listing for 2015 on the CSE.

Richard Peiris & Company Director Prof. Lakshman R. Watawala rang the ceremonial opening bell to begin trading for the day and he was joined by Arpico Insurance Viville Perera, Arpico Insurance S. Sirikananathan, Arpico Insurance Director Jagath Dissanayake, Arpico Insurance CEO D.C. Kevitiyagala, Arpico Insurance AGM Operations T.S. Kitchilan, Arpico Insurance Finance Manager Melanga A. Doolwala, Richard Peiris Securities Dilruk Fernando, Arpico Ataraxia Director Sharad Sri and Arpico Ataraxia Investment Banking Vice President Tharanga Gamage.

On the first day of trading Arpico Insurance Limited shares’ opened at Rs. 14.00, closed at Rs. 14.10, and reached a high of Rs 15.00. Through the IPO Arpico Insurance raised Rs 79.56 Million by way of listing 6,630,400 shares at Rs 12.00.

Arpico Insurance began operations in January 2012. The company is now expanding its geographical presence and covering eight major provinces, Western, Southern, Northern, North Western, North Central, Eastern, Sabaragamuwa and Uva, with a total branch network of 19.

Arpico Insurance launched its IPO on 11 December and was oversubscribed by 12 December.

The company opened for trading on the CSE on the completion of three years of operation, on 12 January. This marks a major milestone in the company’s history and displays its commitment towards good corporate governance and sharing its success with the public.

Arpico Insurance is a subsidiary of Richard Pieris and Company PLC.
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