The Bourse continued its upward momentum as the ASPI increased by 74.92 points (or 1.15%) to close at 6,610.46 points, while the S&P SL20 Index too increased by 50.56 points (or 1.35%) to close at 3,786.39 points.
Turnover & market capitalization
JKH was the highest contributor to the week’s turnover value, contributing LKR 1.88Bn or 27.77% of total turnover value.
Melstacorp followed suit, accounting for 11.66% of turnover (value of LKR 0.79Bn) while Commercial Bank contributed LKR 0.59Bn to account for 8.73% of the week’s turnover.
Total turnover value amounted to LKR 6.77Bn (cf. last week’s value of LKR 11.09Bn), while daily average turnover value amounted to LKR 1.35Bn (-38.96% W-o-W) compared to last week’s average of LKR 2.22Bn. Market capitalization meanwhile, increased by 1.15% W-o-W (or LKR 32.97Bn) to LKR 2,908.77Bn cf. LKR 2,875.80Bn last week.
Liquidity (in value terms)
The Diversified Sector was the highest contributor to the week’s total turnover value, accounting for 41.13% (or LKR 2.78Bn) of market turnover. Sector turnover was driven primarily by the JKH & Melstacorp which accounted for 95.87% of the sector’s total turnover.
The Banking, Finance & Insurance Sector meanwhile accounted for 32.51% (or LKR 2.20Bn) of the total turnover value with turnover driven primarily by Commercial Bank, HNB & Pan Asia which accounted for 78.43% of the sector turnover.
The Manufacturing Sector was also amongst the top sectorial contributors, contributing 10.53% (or LKR 0.71Bn) to the market. The sector turnover was driven by Chevron, Teejay Lanka and Tokyo Cement which accounted for 65.72% of the sector turnover.
Liquidity (in volume terms)
The Banking, Finance & Insurance Sector dominated the market in terms of share volume, accounting for 33.09% (or 80.36Mn shares) of total volume, with a value contribution of LKR 2.20Bn.
The Diversified sector followed suit, adding 21.69% to total turnover volume as 52.66Mn shares were exchanged. The sector’s volume accounted for LKR 2.78Bn of total market turnover value. The Hotels & Travels Sector meanwhile, contributed 44.39Mn shares (or 18.28%), amounting to LKR 0.32Bn.
Top gainers & losers
Kotmale Holdings was the week’s highest price gainer; increasing 49.00% W-o-W from LKR 195.10 to LKR 290.70. Huejay International gained 22.41% W-o-W to close at LKR 35.50 while Radient Gems gained 21.89% W-o-W to close at LKR 28.40. Browns Capital (+18.75% W-o-W) and SMB Leasing (+16.67% W-o-W) were also amongst the gainers.
Blue Diamonds[X] was the week’s highest price loser, declining 20.00% W-o-W to close at LKR 0.40. Printcare (-14.04% W-o-W), Adam Capital (-11.11% W-o-W) and Lake House Printers (-10.42% W-o-W) were also amongst the top losers over the week.
Foreign investors closed the week in a net buying position with total net inflows amounting to LKR 2.16Bn relative to last week’s total net inflow of LKR 6.55Bn (-66.98% W-o-W). Total foreign purchases decreased by 54.20% W-o-W to LKR 4.08Bn from last week’s value of LKR 8.90Bn, while total foreign sales amounted to LKR 1.91Bn relative to LKR 2.35Bn recorded last week (-18.50% W-o-W).
In terms of volume, Kandy Hotels & JKH led foreign purchases while Asia Assets and Browns Investments led foreign sales. In terms of value, JKH & Kandy Hotels led foreign purchases while Chevron & Tokyo Cement led foreign sales.
Point of view
Last week’s positive momentum led by blue chips continued this week too, helping push the benchmark ASPI to an ~11 month high. Sri Lanka defeating a motion to deny GSP+ trade concession, continued foreign buying, positive corporate earnings boosted the investor confidence this week helped the Index gain 75 points over the week to close at 6610.46 points.
The market rally since late last March has led to the bench mark price index gain a cumulative ~550 points, which help improve gains to 6.1% Y-T-D (cf. 4.9% last week). Off board large parcels accounted for ~41% of market turnover for the week helping push average turnover for the week to LKR 1.35 Bn, ~48% higher than Y-T-D turnover of LKR 0.91Bn. Crossings in JKH accounted for ~28% of the week’s total crossings while Melstacorp accounted for ~21% & of the week’s total crossings.
On the foreign investor side meanwhile, the net foreign position on the bourse continued in the green for the 11th consecutive week as the net buying position amounted to LKR 2.16Bn, bringing the total net inflows for the year to LKR 15.86Bn (cf. net outflow of LKR 3.19Bn Jan-Apr ’16). Similar market momentum is likely to prevail in the week ahead amid some profit taking.
EU grants GSP+, CB forecasts 5.0% GDP growth in ‘17E
Sri Lanka won the EU parliamentary vote on GSP+ yesterday (by 436) votes enabling tariff concessions across a wide range of exports to the EU. The GSP+ scheme is designed to help developing countries by granting full removal of tariffs on over 66% of tariff lines covering a wide array of products.
The EU was Sri Lanka’s main export destination in 2015, accounting for nearly 1/3 of the country’s global exports and the restoration of GSP+ is expected to benefit listed entities in the Apparel, Rubber and Ceramics Industries In its Annual Report for 2016 meanwhile, the Central Bank (CB) noted that the country is expected to progress towards higher growth trajectory over the medium term upon addressing certain structural issues.
The CB added that the formulation of policy frameworks with the help of multilateral agencies including the IMF, along with the swift and consistent implementation of these policies will be essential to improve the economy’s productivity and efficiency.
The CB also emphasized the importance of attracting Foreign Direct Investments, improving export income through diversified exports (eg: value added, technologically intensive products), attracting high spending tourists as key measures to reach a higher economic growth over the medium term.
The Monetary Authority projects a GDP growth rate of 5.0% Y-o-Y in 2017E (cf. 4.4% in 2016) and a medium-term output target of ~6.5-7.0% Y-o-Y.
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