Asia Wealth attributed below par earnings as one of the factors for the cautious approach adopted by the retailers in its latest report.
"Corporate earnings released for 4QCY2012 that was mostly below expectations, highlights on the ongoing human rights issue, recent fuel price hike and the lowering of the country's economic outlook by the International Monetary Fund (IMF) would have partially attributed to this 'wait-and-see' approach adopted by the retailers," the report said.
"Considering the earnings performance for 4QCY2012, country's leading banks have posted commendable earnings for the quarter amidst the challenging environment, whilst majority of the hotels depicted an average performance despite the quarter being the peak season for tourism. Earnings of majority of the companies in the diversified sector and manufacturing sector dipped owing to the depreciation of Rupee, increase in interest costs and rise in energy cost. However, plantation companies that have high exposure to tea had witnessed commendable performance primarily due to the increase in tea prices during the quarter."
During the week the All Share Index (ASI) declined 82.92 points to close at 5,652.69 points (-1.4%) Week-on-Week (WoW) while the S&P SL20 index dropped by 16.43 points to close at 3,206.85 points (-0.5% WoW). The ASI declined mainly on the back of the losses made by Ceylon Tobacco Company (-5.6% WoW), Sri Lanka Telecom (-4.0% WoW), John Keells Holdings (-1.5% WoW), CT Holdings (-6.8% WoW) and Lanka ORIX Leasing Company (-5.8% WoW), Asia Wealth Management said.
While the IMF has lowered the country's economic growth to 6.25% for 2013E, quoting reasons such as high inflation, and lower tax revenue; the projected growth still remains above the regional countries, the report observed and said: "In that context, we believe that the Colombo bourse continues to be relatively attractive. Thus we advice the investors to take position on fundamentally-strong counters in sectors that are likely to post good performance and align their portfolio for medium to long-term investment horizon."