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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Foreign bargain hunting at bourse despite rupee depreciation

Foreign bargain hunting at bourse despite rupee depreciation

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Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
The recent foreign play notable in their selective favourites seem to have been an eye opener for the local investors as an improvement in the overall sentiments of the bourse was observed Tuesday, Softlogic Equity Research (SER) said.

"ASPI closed at 4,968.53 points (+0.39%) whilst the MPI outpaced with a gain of 0.85% at its close of 4,608.7 points. S&P SL20 index gained 0.28% at its close of 2,807.2 points.

"Foreign investors are increasing their footprints in the bourse at the expense of the local investors who have mostly stayed on the sidelines or the sales end. The attractive valuations and the abundance of well beaten stocks have led to the pump of capital into Sri Lankan equities by the non-nationals. It is clear cut that the local investors are merely losing on the discounts available as we see the overseas investors feasting on the bargains. It is a known fact that foreigners would not invest in a depreciating currency environment as this, as they will be forced to withdraw less when they need to take money home. Colombo bourse’s advancement to be amongst the region’s attractive investment radar has blinded the foreigners by the fact of the country’s depreciating currency," SER said.

"With the ascending interest rate pattern, we encourage investors on the BUY & FORGET scheme. These stocks rise and fall from day to day, too, but years from now, the companies behind them should still be dominant players in their industries, providing for its investors. Such stocks include picks with high DYs [with the present down run and interest rate in mind], long held stable management comprise, strong diversification with solid brands and less share price flux. The investment yardstick should be extended eyeing a minimum 3 years whereby you buy on the confident play and forget worrying on the daily fluctuations. But to be noted would be that pricing of these stocks comes with a premium with the safe featuring.

"Cumulative earnings for 1QFY13 stand at LKR 31.1 bn (-17% YoY and -33% QoQ) holding the market’s trailing PER at 10.9X.

"Lion Brewery secured its place in the top turnover slot as a further 100k share crossing took place at LKR230.0 followed by three on-board trades counting 141.3k shares at LKR230.0 and LKR229.0. The brewer saw its price ballooning up 9.5% since the sudden surge of foreign interest. Foreign buying into the counter is backed by the confidence laid on the extensive expansion plan by the beer industry with Lion Brewery taking the lead. The share which joined our growth bandwagon in April 2012, now trades at 12.0X FY12E and 9.0X FY13E.

"John Keells Holdings continued with its trend as a 50k share block was taken on board at LKR198.0 whilst Distilleries persisted to see investor attention as it gained 0.7% for the day. PC House saw 8.5 mn share trade at LKR5.9 during the closing hours of trade in the market. People’s Merchant Bank was drawn to the top trading screen after a 874.9k share deal took place at LKR14.0 in the market. Commercial Bank, Nations Trust Bank and Sampath Bank topped the banking sector picks as the trio advanced 1.3%, 5.1% and 0.9% at their close of LKR101.2, LKR52.1 and LKR166.0 respectively. Lanka Orix Leasing encountered a 119k share block taking place in the market at LKR40.0 whilst Richard Pieris saw a number of mid-sized parcels moving hands in the market. Citizens Development saw a 200k share quantity being picked in the market at LKR28.0 whilst Laugfs Gas [Non-Voting] saw a similar transaction reading 340.5k share at LKR13.5. Interest was also evident in John Keells Hotels and Ceylon Cold Stores along with Aitken Spence and its hotel holdings," SER said.
http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=59743

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