Earnings of listed corporates for the quarter ended 30 June 2015 showed a 10% year-on-year growth to Rs 47 billion amidst the slowdown depicted 'Quarter On Quarter basis (-12.8%) mainly on the back of continuously underperforming plantation and oil palm sectors, First Capital Research report said.
Positive contributions derived from growing consumption led Banking and Finance, Food and Beverage and Manufacturing sectors have assisted earnings to maintain at sustainable levels, the report stated.
According to report, the top contributor, the Banking and Finance sector continued its earnings uptrend by recording an earnings of Rs 4.4 Billion (31% YoY) amidst the boost in private sector borrowings.
"However, the positive contribution emanated from banks and finance companies was diminished by the negative impact derived from insurance companies, resultant to trading losses incurred due to slow movements in interest rates in the economy."
Manufacturing and Food and Beverage sectors also experienced a growth momentum owing to increasing demand for products coupled with improved disposable income.
Plantation and oil palm sectors were the main negative contributors to the June quarter earnings (139%YoY and 62%YoY respectively) due to lower commodity prices together with political and economic unrest prevailed in main export destinations.
As a result of lower trading gains recorded in the year, investment trusts sector's earnings also plunged by 70% to Rs 357 million, the report stated.
Low interest rate regime, higher disposable income and stable exchange rate are likely to drive Colombo Stock Market earnings for next March quarter positively affecting Banking and Finance, F & B, Manufacturing and Trading sectors while indirectly affecting diversified sector as well, the report said.
Realizing its June quarterly review, First Capital Research said that market returns are likely to stay low amidst the current uncertainty in the political front.
"Market returns to be strong once the prevailing uncertainty settles down. However, we expect a slowdown in economic conditions beyond June 2016 due to possible rise in interest rates affecting companies across the board ", it stated.
As a result the report predicted that Market earnings to slowdown for the earnings period Dec 2016E / Mar 2017E resulting in an earnings forecast of 4%-5% YoY.
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Positive contributions derived from growing consumption led Banking and Finance, Food and Beverage and Manufacturing sectors have assisted earnings to maintain at sustainable levels, the report stated.
According to report, the top contributor, the Banking and Finance sector continued its earnings uptrend by recording an earnings of Rs 4.4 Billion (31% YoY) amidst the boost in private sector borrowings.
"However, the positive contribution emanated from banks and finance companies was diminished by the negative impact derived from insurance companies, resultant to trading losses incurred due to slow movements in interest rates in the economy."
Manufacturing and Food and Beverage sectors also experienced a growth momentum owing to increasing demand for products coupled with improved disposable income.
Plantation and oil palm sectors were the main negative contributors to the June quarter earnings (139%YoY and 62%YoY respectively) due to lower commodity prices together with political and economic unrest prevailed in main export destinations.
As a result of lower trading gains recorded in the year, investment trusts sector's earnings also plunged by 70% to Rs 357 million, the report stated.
Low interest rate regime, higher disposable income and stable exchange rate are likely to drive Colombo Stock Market earnings for next March quarter positively affecting Banking and Finance, F & B, Manufacturing and Trading sectors while indirectly affecting diversified sector as well, the report said.
Realizing its June quarterly review, First Capital Research said that market returns are likely to stay low amidst the current uncertainty in the political front.
"Market returns to be strong once the prevailing uncertainty settles down. However, we expect a slowdown in economic conditions beyond June 2016 due to possible rise in interest rates affecting companies across the board ", it stated.
As a result the report predicted that Market earnings to slowdown for the earnings period Dec 2016E / Mar 2017E resulting in an earnings forecast of 4%-5% YoY.
www.ceylontoday.lk
