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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Bourse ends on the up, 2012 dip lower than 2011

Bourse ends on the up, 2012 dip lower than 2011

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COLOMBO, Dec 31 (Reuters) - Sri Lanka's main share index closed at 10-week high on Monday amid record foreign inflows, but the bourse still shed 7 percent in 2012 to end in red for a second year running.

Many retail investors avoided the market during the year due to high interest rates and a lack of confidence in the local regulatory environment.

The head of the Securities and Exchange Commission (SEC) resigned in August, citing pressure to quit, and analysts said boosting the confidence of retail investors through strong regulatory measures and reducing market interest rates will be key to gains in the coming year.

Retail investors account for around 60 percent of the daily trade in the bourse.

On Monday, the main share index closed 0.64 percent, or 35.87 points firmer, at 5,643, its highest close since Oct. 19, Reuters data showed.

It fell 7.1 percent for this year, compared to an 8.5 percent decline in 2011.

The island nation saw a foreign inflow of 38.63 billion Sri Lanka rupees ($303.81 million) in 2012, compared with last year's $168 million outflow.

'We see a positive sentiment next year as interest rates have started to fall,' a stockbroker said on condition of anonymity. 'Foreign buying in select blue chips still continues.'

Treasury bill yields eased by between 21 and 49 basis points at a weekly auction last week in line with a surprise cut in interest rates earlier this month.

Foreign investors bought a net 137.4 million rupees worth of shares, extending net foreign buying this year to a record 38.63 billion rupees.

The day's turnover was 289.3 million rupees, far below this year's average of 883.6 million rupees. Last year's daily average was 2.3 billion rupees.

The rupee fell to 127.50/60 to the dollar in dull trade amid mild importer demand for dollars, currency dealers said.

The currency has depreciated 10.7 percent in 2012 after the central bank allowed a flexible exchange rate regime in February this year. ($1 = 127.1500 Sri Lanka rupees)

(Reporting by Shihar Aneez; Editing by Toby Chopra)

(+94-11-232-5540)(Reuters Messaging:


Director - Equity Analytics
Director - Equity Analytics
Dec 31, 2012 (LBO) - Sri Lanka's stocks closed up 0.6 percent Monday, down 7.1 percent for the year, on top of an 8.5 percent loss in 2010, though the market has gained from mid 2012, brokers said.

The Colombo All Share Price Index closed at 5,643.00 up 36 points and the S&P SL20 index closed up 16.3 points at 3,085.33 up 0.5 percent.

Turnover was 289 million rupees with interest seen in John Keells Holdings, which closed at 219.90 up 50 cents, Nestle Lanka which closed up 93.50 rupees at 1,593.50 and Ceylon Tobacco which closed up 10.90 rupees at 830.00 brokers said.

Though the market ended the year down, there has been strong foreign investor interest with valuations coming to more realistic levels.

Sri Lanka has seen a net 280 million US dollars flowing into equity markets by the end of December 2012.

NDB stockbrokers said the benchmark index had gained 13.6 percent during the second half of the year.

Data from Bloomberg newswires showed that Sri Lanka was the 11th worst performing market coming in just ahead of Mauritius stock which fell 8.28 percent.

The worst performing index was the General Market Index in Cypress which had fallen 60 percent.

The best performing market tracked by Bloomberg was Venezuela which had so far risen 302 percent amid high inflation. Turkey was a distant second with a 53 percent gain.

In 2012 Venezuela had recorded official inflation of 19.9 percent down from 27.6 percent in 2011 as the country's authoritarian president Hugo Chavez upped election related spending supported by loose monetary policy.

The oil exporting nation's Central Bank had sold 40 billion US dollars of foreign exchange up to November to defend a soft dollar peg, Governor Nelson Merentes said in a statement on December 29.

A steep devaluation of the Bolivar of up to 60 percent is expected in the first quarter of 2013 to bring the currency close to an unofficial 'black market' rate.

Sri Lanka's Central Bank has better monetary policy though the country registered inflation close to Venezuela up to 2007.

Sri Lanka's stocks rose 125 percent in 2009 after the end of a 30 year war. In 2010 the market rose another 96 percent partly helped by loose monetary policy and margin credit which fired an asset price bubble.

The credit bubble broke in 2011 amid a balance of payments crisis and rising interest rates. Rates are now falling.


The Colombo stock market ended the final day of 2012 on the up, though on thin volume, and closed the year down by 7%, lower than the 8.5% negative return in 2011.

The ASI gained 36 points, whilst turnover was a low Rs. 289.3 million. Market capitalisation was Rs. 2.16 trillion, down by 2% from 2011.

The Milanka Index, which will be replaced by S&P SL20 index from 2013, however closed almost flat (down one point). The MPI finished 2012 down by 2%.

NDB Stockbrokers said both indices had gained 13.6% and 16.8% during the second half of 2012. Softlogic Stockbrokers said the market was on a positive sentiment as it ended in the green for the sixth consecutive day, reaching the highest point since 19 October 2012.

“The year-to-date drop in the All Share Price Index is approximately 7.1%, which is relatively better than the previous year’s drop. The year ahead should hold better fortune as falling interest rates coupled with improving global macro-economic environment will encourage participation in the equity markets,” Lanka Securities said.

Other analysts said the all-time high Rs. 39.2 billion net foreign inflow was an emphatic achievement of the Colombo Bourse. Yesterday the net inflow was Rs. 106 million. Asia Wealth Management said: “Reflecting the positive prospects for 2013,” continued institutional and high net worth participation extended during trading, with a block trade on Nestlé Lanka for 40,000 shares at Rs. 1, 575.

Similar interest seen on Sampath Bank, John Keells Holdings, Textured Jersey Lanka and Commercial Bank of Ceylon also strengthened the activities for the day. The retail investor contribution for the day’s activities however remained minimal, owing to the festive season.

Nestlé (the biggest contributor to turnover with Rs. 67.2 million) and Ceylon Tobacco Company touched all-time highs, said Lanka Securities, which added: “Activity was dominated by blue-chip counters although retail push was seen on selected counters, especially in penny stocks.

“Sampath Bank saw Rs. 45.2 million in turnover and John Keells Holdings (Rs. 32.3 million). Most active counters for the day were Asia Asset Finance, Amana Takaful, and Capital Alliance Finance. Notable gainers for the day were Infrastructure Developments up by 28.6% to close at Rs. 180.00, Capital Alliance Finance up by 27.2% to close at Rs. 24.80, and Ceylon Leather Products warrant-13 up by 23.8% to close at Rs. 7.80.

Notable losers for the day were Singalanka Chemicals down by 5.8% to close at Rs. 97, Renuka Holdings down by 3.3% to close at Rs. 35.60, and Marawila Resorts down by 1.4% to close at Rs. 7.30.

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