Colombo Stock Exchange Market Review – 02nd Jan 2017

(Click here)

Colombo Stock Exchange Trade Summary 02-Jan-2017

ASI suffered its worst start to a year since 2002 as the index shed 35.39 points (-0.6%) to close at 6,192.87. S&P SL 20 index slid 23.94 points (-0.7%) to close at 3,472.50. 

John Keells Holdings dipped 3.5% to LKR 140.00 amid selling pressure from the foreign investors. Further Trans Asia Hotels (closed at LKR 82.60, -12.1%) and Sri Lanka Telecom (closed at LKR 35.00, -2.8%) lost ground in today’s session dragging the index to the negative territory. Overall market sentiments remained bearish with 42 gainers and 62 losers. 74 stocks remained unchanged. 

Market turnover was LKR 329mn. John Keells Holdings contributed 68% of the turnover supported by the only crossings of the day where 0.3mn shares changed hands at LKR 140.00. Apart from John Keells Holdings (LKR 222mn), Hemas Holdings managed to contribute LKR 49mn while other stocks did not managed to surpass LKR 5mn. 

Market activity was most concentrated on John Keells Holdings while Melstacorp and Property Developers managed to gain some attention of the retail investors. Melstacorp lost further ground on its second day of trading and the share closed at LKR 58.00 down 2.2%. On the other hand, Property Developers retained its positive momentum and it closed 3.9% higher at LKR 108.60. Property Developers declared an interim dividend of LKR 15.00 per share last Thursday. 

Foreign investors were net sellers of LKR 26mn worth of shares. Foreign participation was 23%. Top net outflows were seen in John Keells Holdings (LKR 78mn) and Tess Agro (LKR 1mn) while top net inflows were seen in Hemas Holdings (LKR 48mn) and Hatton National Bank (LKR 4mn).

Source: LSL

Sri Lankan shares fall as Keells draws selling

Reuters: Sri Lankan shares fell on the first trading day of 2017 as investors sold market heavyweight John Keells Holdings Plc and other blue chips amid worries over a weakening rupee and rising interest rates.

Conglomerate John Keells Holdings Plc fell 3.5 percent and accounted for 67.6 percent of Monday's turnover of 329.2 million rupees ($2.2 million).

The Colombo stock index closed down 0.6 percent at 6,192.87. The bourse fell 9.7 percent in 2016, its second straight annual decline.

"Investors are selling Keells because a high net worth investor sold large quantities. So investors sold the shares on speculation that Keells will fall further," a stockbroker said, asking not to be named.

"There has been some foreign selling in Keells in the last month as well."

In dollar terms, Sri Lanka's stock market fell 13 percent in 2016, making it a worse performer than emerging Asian markets like Malaysia, Thailand, Indonesia and Singapore.

Stockbrokers said Sri Lanka's failure to attract foreign direct investments and lack of investor confidence due to a reversal in some budget policies weighed on the market and on the rupee, which fell 3.9 percent in 2016 and remains weak.

The central bank on Friday kept its benchmark interest rates steady for a fifth straight month as expected, saying credit growth was responding to earlier tightening measures. Government borrowing costs, however, are rising as the recent increase in U.S interest rates raises the risk of capital outflows from emerging markets such as Sri Lanka, adding pressure on the rupee.

Foreign investors sold a net 26.4 million rupees of equities on Monday.

Shares in Trans Asia Hotel Plc dropped 12.1 percent while Sri Lanka Telecom Plc fell 2.8 percent and shares in Commercial Bank of Ceylon Plc slipped 1.2 percent. 

($1 = 149.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Susan Fenton)

CSE hopeful about 2017 as foreign inflow gathers pace

• Total foreign investor contribution records 42.5% in 2016 compared to 34.4% in 2015

• Around 7 IPOs in pipeline with few non-strategic enterprises expected in Q1

• SME and dollar denominated boards to be launched before first half of the year

• Lack of proper valuation for stocks a major roadblock to attracting new firms to be listed on CSE 

By Charumini de Silva

Despite the overall adverse performance of the Colombo Stock Exchange (CSE) last year due to a multitude of reasons, the country’s capital market could still be hopeful that the positive trend of foreign investor interest will continue with sizable investments lined up to take off during this year.

The total foreign investor contribution to market turnover recorded 42.5% compared to 34.4% in 2015, while recording a total net foreign flow of Rs. 633.5 million last year compared to the Rs. 5.4 billion in foreign outflow in 2015.

“Although both indices in 2016 have been negative, the flipside we have seen is that there is a foreign net inflow this year. This means that foreigners are still selectively looking at stocks, which I feel provides a good opportunity for the accumulation of stocks because it offers good value right now. I think investors should really make use of this opportunity,” CSE Chief Executive Officer Rajeeva Bandaranaike told the Daily FT.

He assured that the market would see around six to seven initial public offerings (IPOs) during this year, with few non-strategic enterprises in the pipeline to be listed in the first quarter adding that the CSE is ready to facilitate those enterprises. He believes the entry of non-strategic enterprises will infuse more activity and life into the market.

In addition, Bandaranaike said the SME board and dollar denominated board initiatives would be implemented before the end of first half of 2017. “We expect to launch the dollar denominated board within the first half and the SME board within the first quarter. Already we have received a favourable number of inquiries for the dollar denominated board, which will help the CSE to achieve hub status in the region,” he added.

Noting that liquidity has been an issue, he emphasised that the CSE had been constantly pushing to get more companies with a larger public float to the market but a lack of proper valuation for stocks had been a major roadblock to attracting new firms to get listed.

“The future potential is huge with many companies in both the state and private sector waiting for the right time to enter the market. The country needs to have an economic boon for this as only then will they realise that the internal funds are not adequate for their growth. That is the time they will reach the capital market and that is the time you will really see the capital markets surging,” he explained.

However, Bandaranaike stressed that it was important to improve market sentiments such as exchange rate, foreign inflows, FDIs and interest rates along with the infrastructure development for the capital market to gather pace during the year.
www.ft.lk