ECONOMYNEXT – Earnings growth of Sri Lankan companies listed on the Colombo Stock Exchange are likely to slowdown in the second and third quarter of 2016, stockbrokers First Capital Equities said.
They attributed the slowdown to the likely slowdown in consumer demand resulting from the tighter monetary policy, higher interest rates and price increases in imports because of the depreciation of the rupee.
“However, we believe banking sector is likely to provide stability with higher margins while construction and building material companies may continue to show strong performance with the government’s infrastructure drive,” First Capital Equities said in a research note
The brokers forecast overall market earnings growth for the December 2016 and March 2017 financial years to be at 4%-5% year-on-year.
“We also expect market earnings to accelerate from 2H2017E onwards resulting in earnings for December 2017E / March 2018E growing by 11%-12% YoY,” the report said.
First Capital Equities said market returns will be bullish only in the mid-term and “conditionally on the longer term” if interest rates fall.
They attributed the slowdown to the likely slowdown in consumer demand resulting from the tighter monetary policy, higher interest rates and price increases in imports because of the depreciation of the rupee.
“However, we believe banking sector is likely to provide stability with higher margins while construction and building material companies may continue to show strong performance with the government’s infrastructure drive,” First Capital Equities said in a research note
The brokers forecast overall market earnings growth for the December 2016 and March 2017 financial years to be at 4%-5% year-on-year.
“We also expect market earnings to accelerate from 2H2017E onwards resulting in earnings for December 2017E / March 2018E growing by 11%-12% YoY,” the report said.
First Capital Equities said market returns will be bullish only in the mid-term and “conditionally on the longer term” if interest rates fall.
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