Market Review – 31st Dec 2015

January, 1, 2016

Colombo bourse concluded the year’s activity on an optimistic note despite the thin market activity which continued for the seventh consecutive day. Benchmark index declined to 6,843 mark but regained to close at 6,894.50, with a gain of 0.35% or 23.87 index points while 20-scrip S&P SL index gained 20.62 index points or 0.57% to close at 3,625.69.

Today’s gains were boosted by banking sector counters namely, DFCC Bank (closed at LKR 168.90, +3.8%), Amana Bank (closed at LKR 6.00, +22.5%) and Hatton National Bank (closed at LKR 212.00, +1.1%). Further, price appreciations in Aitken Spence (LKR 98.00, +6.5%) and Asiri Hospital Holdings (LKR 24.00, +3.9%) contributed positively to the index performance.

With investors remaining on the side lines in holiday season, daily turnover continuously failed to surpass the LKR 1.1bn daily average turnover of the year for the twelfth consecutive day. John Keells Holdings emerged as the top contributor to the turnover with LKR 116mn underpinned by two crossings of 0.48mn shares at LKR 178.00-178.50. Commercial Bank (LKR 33mn), Access Engineering (LKR 22mn) and Sampath Bank (LKR 21mn) were next best contributors to the turnover.

Market breadth was positive on the last day of the year where out of 246 counters, 146 advanced, 52 slipped while 48 remained unchanged. Cash map declined from 73% to 68%. 22 counters touched 52wk low price levels while 5 counters managed to reach 52wk high price levels.

Commercial Bank witnessed heavy trading activity where counter declined to a 52wk low price of LKR 139.90 but managed to close higher at LKR 140.50, +0.4%. Further, Orient Garments, Access Engineering and Ceylon Printers were among heavily traded counters.

Furthermore, Ceylon Tobacco declared the fourth interim dividend of LKR 5.00 but script declined by 0.1%, to close at LKR 995.00. Meanwhile, Metropolitan Resource Holdings announced that the shares of the company will be delisted from CSE and offered to purchase the remaining shares at a price of LKR 28.00 per share.

Moreover, Board of Directors of the Renuka Holdings resolved to subscribe to 224.9mn rights of Renuka Developments Limited for a total consideration of LKR 1.1bn. Renuka Developments Limited intends to utilize the funds for the property project in Colombo 03.

Foreign investors were net buyers with a net foreign inflow of LKR 49mn after six consecutive days of outflows. Foreign participation was 33%. Net foreign inflows were seen in John Keells Holdings (LKR 92mn), Central Finance (LKR 2mn), Bairaha Farms (LKR 1mn) while net foreign outflow was mainly seen in Commercial Bank (LKR 29mn).

During the final week of the year, benchmark index advanced by 0.52% or 35.86 index points while S&P SL20 index increased by 0.60% or 21.79 index points. Amana Takaful (+15%), Softlogic Capital (+10%) and Asia Asset Finance (+6%) were among the top gainers of the week while Orient Garments (-14%), Abans Finance (-7%) and Office Equipment (-7%) were among the top losers.

The average weekly turnover inclined by 14% to LKR 315mn. Commercial Bank topped the weekly turnover list with LKR 295mn followed by Hatton National Bank (LKR 219mn) and John Keells Holdings (LKR 189mn).

The foreign investors were net sellers during the week recording a net foreign outflow of LKR 154mn. Foreign activity was at 48%. Top net outflows reported in Commercial Bank (LKR 215mn), Access Engineering (LKR 29mn) and Nestle Lanka (LKR 15mn) while top net inflows were mainly seen in John Keells Holdings (LKR 112mn), Hatton National Bank non-voting (LKR 7mn). Subsequent to this week’s net foreign outflows, the total net foreign outflow in 2015 increased to LKR 4.4bn.

During the year 2015, All share index recorded a loss of 404.45 index points or 5.5%, in contrast to the 23.4% return recorded in 2014. S&P SL20 index declined by 11.3% or 463.45 index points compared to the return of 25.3% in 2014. Daily average market turnover dipped 25% from LKR 1.4bn (CY2014) to LKR 1.1bn in 2015. Moreover, daily average volume declined by nearly one fold to 39mn shares in 2015.

Activity of foreign investors increased from 28% (CY2014) to 35% in 2015. During the year, 3-month treasury yield advanced by 71 bps (+12.4%) while 6-month yield and the 12-month treasury rate inclined by 99 bps (+17.0%) and 130 bps (+21.7%) respectively.

Lanka Securities Research