Colombo Equities slumped again on Monday, mirroring a similarly sharp selloff seen in the previous session as the impact of proposed ‘super gain tax’ rippled through the market for the second consecutive day. During the two post budget trading sessions, main index slipped by 5.1% (376 index points) while S&P SL20 index declined by 7.5% (310 points). With the last two days sell-off the market RSI has declined to 29 while the market PE has dropped to 13.6x.

During todays’ trading session, ASI declined to 7,000 mark, after 5 months ,shedding 179.99 index points or 2.5% to close at 7,000.06 while 20-script S&P SL index decreased by 137.26 index points (-3.7%) to end at 3,824.98.

John Keells Holdings declined sharply for the third day in a row and all three counters of the company touched 52wk low price level. The super gain tax and the ban on gaming facility/casino in the waterfront project led to the decline in JKH. Main share touched LKR 200.00 and closed at LKR 200.10 (-6.4%). JKH warrant 22 became the top loser today as it lost 25.3% to close at LKR 38.10. JKH warrant 0023 counter declined to 50.10 and close higher at LKR 51.80 (-10.1%).

Further, price declines in Ceylon Tobacco (closed at LKR 1,050.00, -2.1%), Dialog Axiata (closed at LKR 11.30, -5.8%) & Commercial Bank (closed at LKR 159.50, -5.1%) dragged index performance to red zone.

Daily market turnover was LKR 1.3bn. John Keells Holdings topped the turnover list with LKR 561mn underpinned by single crossing of 0.3mn shares at LKR 204.00. Turnover from the counter accounted for 43% of the total turnover.

People’s Leasing & Finance & Sierra Cables were next best contributors to the turnover with LKR 187mn and LKR 46mn respectively. Further 1mn shares of People’s Leasing & Finance changed hands at LKR 23.80. Aggregate value of crossings represented 6% of the total turnover.
Out of 255 counters, 170 slipped, 53 advanced while 32 remained unchanged. Cash map declined sharply to 28% from 46%. 20 counters touched 52wk low price levels.

Further shares of Access Engineering, Dialog Axiata & Commercial Bank were among heavily traded counters of the day.

Adding to the market's woes, foreign investors were net sellers after three consecutive days of net buying. Today’s net foreign outflow was LKR 180mn while foreign participation was 41%. Net foreign outflows were seen in John Keells Holdings (LKR 404mn), Commercial Bank (LKR 27mn) and Asia asset finance (LKR 6mn) while net foreign inflow was mainly seen in Peoples Leasing & Finance (LKR 156mn).

Meanwhile Janashakthi Limited announced that the company has purchased approx. 6.6mn shares (86.8% issued shares) of Bartleet Transcapital Limited at a price of LKR 875mn. Subsequent to the purchase, company holds 99.8% of the issued share capital of Bartleet Transcapital Limited.

Subsequent to the positive interim results of Sierra Cables, the counter advanced to LKR 4.70 and closed at LKR 4.50 (+2.3%). Surprisingly, Hayleys MGT counter declined to LKR 17.50 (-3.3%) despite the favorable results released in the third quarter of the current financial year.

Further Lankem Ceylon has acquired 72.5% of the equity of J.F. Packaging (Pvt) Ltd for a consideration of LKR 600mn. J.F. Packaging (Pvt) Ltd, is engaged in the business of providing packaging solutions.

Meanwhile, apart from “super gain tax”, the speculation on possible dissolution of DFCC-NDB merger plans (based on media reports) affected the share price of the two banks. NDB touched a low of LKR 220.00 but closed higher at LKR 227.00 (-4.4%) while DFCC Bank decline to LKR 203.00, and closed at LKR 209.00 (1.4%).

Softlogic Holdings deny the allegations made in media reports regarding property owned by Milco Private Limited. It was mentioned that, the company has only submitted applications for the tender call and has not entered into any formal agreement with the BOI to obtain leasehold rights for the 13.5 Acre property owned by Milco. During the day, Softlogic Holdings counter declined to LKR 13.00 and end at LKR 13.50 (-2.9%).
Meanwhile, at today’s weekly primary T-bill auction, 3 month yield advanced by 2bps to 5.82% while 6 month & 12 month yield remained unchanged. Accordingly, 6 month & 12 month yields stood at 5.90% and 6.05% respectively. At the bill auction, LKR 12bn worth of T-bills were issued while it was oversubscribed 2.6 times and LKR 9.9bn were accepted.

Lanka Securities Research