Equities continued to lose steam last week, falling ~23 points week-on-week to hit an eight-month low of 6,352.1 points as concerns over domestic political and policy uncertainty dominated sentiment and the US Fed raised interest rates for the third time this year, Acuity Stockbrokers said in their Share Market Weekly.
Since the first reading of Budget 2018 in early November, the broad-share price Index has fallen ~215 points (-3.3%) with consecutive losses in the six weeks since the budget, the report noted. Average daily turnover levels also fell 24% week-on-week as low market participation, particularly by institutional and high net worth investors dragged the average daily turnover for the week down to Rs.0.71Bn (cf. Rs.0.93Bn last week), it said.
"Crossings for the week accounted for just 36% of total market turnover, lower than the previous week’s crossings of 46% and reflecting the lower participation levels by high net worth and Institutional players. Crossings remained largely centered around mid-cap counters such as Teejay Lanka (28% of total crossings), Amana Bank (15% of total crossings) and LOLC (12% of crossings) while larger-cap blue chips such as JKH and COMB played a less dominant role as they cumulatively accounted for just 10% of total crossings," Acuity reported.
"Despite the lower daily average turnover levels, the year-to-date average remained at Rs. 0.94Bn, higher than the 2016 average of Rs.0.73Bn and reflecting relatively stronger equity market performance from earlier in the year."
Foreign investors however retreated to a net selling position last week, recording net sales of Rs. 0.07Bn as the US Fed raised rates for the third time this year in a widely anticipated move. The move along with the expectation of three hikes in 2018 represents the continuation of the US Fed’s monetary policy normalization which could in turn impact the performance of Emerging and Frontier market equities, Acuity said.
Markets in the week ahead are likely to remain dull ahead of the Christmas holidays, the brokerage anticipated.
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