Equity market expects eventful 2014

The Colombo stock market which slumped prior to Christmas holiday, marginally gained on Thursday and witnessed a bullish rally on Friday to end the week with a WoW gain with foreign investors being net buyers throughout the week. The ASI gained 19.3 points WoW to close at 5,876.7 points (+0.3%), whilst the S&P SL20 Index gained 12.5 points WoW to close at 3,240.6 points (+0.4%). Indices benefitted mainly on the back of gains made by John Keells Holdings (+1.0% WoW), Nestle Lanka (+1.5% WoW), Lanka Orix Leasing ompany (+3.7% WoW), Ceylon Guardian Investment Trust ( +8.2% WoW) and CT Holdings (+4.2% WoW)

The bourse lacked enthusiasm during the week due to the holiday season, whilst year to date lowest market turnover was recorded on Thursday. However renewed interest from retail and institutional investors on Friday drove market turnover to cross the LKR1bn mark. Meanwhile active foreign participation was witnessed during the week albeit being lower cf. the last week possibly due to the announcement made by the Fed during the previous week on reduction of its stimulus program. Further the new directive issued by SEC on maintaining minimum float by listed companies to improve market liquidity is expected to boost market activity during the next year while treasury yields followed a downward trend. Ceylon Tea Services which witnessed 2 crossings and several large trades on the normal board on Friday emerged as the week’s top turnover contributor adding c. 50.9% to the week’s total turnover. Further the daily average turnover for the week reduced to LKR 490.5mn against LKR 872.9mn recorded during the previous week.

Blue Diamond Jewellery Worldwide( Voting) emerged as the highest volume traded stock for the week with a cumulative 19.1mn shares being traded driven by a mix of foreign, retail and high net worth interest. Meanwhile counters such as Hatton national Bank, Commercial Bank of Ceylon and Hayleys also witnessed crossings during the week. The week recorded a total share volume of 63.1mn against 88.4mn recorded in the previous week, which is a 28.6% WoW decrease.

During the week CT Holdings announced an interim dividend of LKR0.8 per share. Meanwhile debentures of Abans, Citizen Development Business Finance, National Development Bank, Nation Trust Bank and Merchant Bank were listed on the main board during the week.

The week saw foreign purchases amounting to LKR 428.6mn whilst foreign sales amounted to LKR177.6mn. Market capitalisation stood at LKR 2,444.9bn and the YTD performance is 4.1%.

Conclusion: Bourse poised for a boom in the new year…
The Colombo Bourse ended the lackluster trading mood witnessed during the holiday season by recording a turnover of LKR 1.3 bn on Friday, against the 12-month average daily turnover of circa LKR 838 mn. Foreigners ended up as net buyers outpacing the foreign selling pressure, indicating the continued interest of the fundamentally driven investor classes on the performance of the Colombo Bourse. The sharp fall in Treasury bill rates seen during the past few weeks, the continuous resurgence of exports receipts since August coupled with the positive interpretation of the Fed’s policy decision to taper its QE efforts by markets across the world would have strongly contributed to this trend. Hence, we expect the activity levels to pick up sharply once the holiday mood of the market participants wither.

Furthermore, the new directive issued by SEC requires all listed companies on the main board to maintain a minimum public holding of 20% by 750 public shareholders or a market capitalization of LKR5bn worth of shares to be held by a minimum of 500 public shareholders with 10% public holdings as a continuous listing requirement from 1st of January 2014. This is expected to affect 70 listed firms including certain large cap companies such as Ceylon Tobacco (15.9%), Nestle Lanka (9.2%), Dialog Axiata (14.7%) etc. However, SEC has provided a 2 year transitional provision to adhere to the criteria whilst permanent failure to comply would lead to suspension of trading or mandatory delisting. This latest move by the SEC is expected to boost the liquidity level of the market and may draw more retail and foreign investors to the trading activity, which may in turn assist the overall wellbeing of the market prospects.

Meanwhile, the month of November recorded the second highest tourist arrivals in the country’s history attracting 112,213 visitors. However, the arrivals in November grew at a considerably slower pace at 2.8% YoY while the growth in arrivals during the first 11 months of the year reached 15% YoY.This indicates that growth in arrivals have slowed during the month despite recording the highest number of arrivals for the year and the second highest in country’s history.

To read the entire report - http://research.srilankaequity.com/t871-27-12-2013-weekly-review-asia-wealth-management-co-ltd#991

The Colombo Bourse ended the lackluster trading mood witnessed during the holiday season by recording a turnover of LKR 1.3 bn on Friday, against the 12-month average daily turnover of circa LKR 838 mn. Foreigners ended up as net buyers outpacing the foreign selling pressure, indicating the continued interest of the fundamentally driven investor classes on the performance of the Colombo Bourse. The sharp fall in Treasury bill rates seen during the past few weeks, the continuous resurgence of exports receipts since August coupled with the positive interpretation of the Fed’s policy decision to taper its QE efforts by markets across the world would have strongly contributed to this trend. Hence, we expect the activity levels to pick up sharply once the holiday mood of the market participants wither.

Furthermore, the new directive issued by SEC requires all listed companies on the main board to maintain a minimum public holding of 20% by 750 public shareholders or a market capitalization of LKR5bn worth of shares to be held by a minimum of 500 public shareholders with 10% public holdings as a continuous listing requirement from 1st of January 2014. This is expected to affect 70 listed firms including certain large cap companies such as Ceylon Tobacco (15.9%), Nestle Lanka (9.2%), Dialog Axiata (14.7%) etc. However, SEC has provided a 2 year transitional provision to adhere to the criteria whilst permanent failure to comply would lead to suspension of trading or mandatory delisting. This latest move by the SEC is expected to boost the liquidity level of the market and may draw more retail and foreign investors to the trading activity, which may in turn assist the overall well-being of the market prospects.

Meanwhile, the month of November recorded the second highest tourist arrivals in the country’s history attracting 112,213 visitors. However, the arrivals in November grew at a considerably slower pace at 2.8% YoY while the growth in arrivals during the first 11 months of the year reached 15% YoY. This indicates that growth in arrivals have slowed during the month despite recording the highest number of arrivals for the year and the second highest in country’s history.

Fully loaded.     

dhanurrox wrote:Fully loaded.     

Loaded with what sort of shares?? Can you elaborate??

expectaions are high that the market will be active in the new year.guys,would like to hear your comments

dudi wrote:expectaions are high that the market will be active in the new year.guys,would like to hear your comments

I'm not recommending shares,Since you want to hear from others I'll tell you one thing.ECL has more surprises.

prabath wrote:

dudi wrote:expectaions are high that the market will be active in the new year.guys,would like to hear your comments

I'm not recommending shares,Since you want to hear from others I'll tell you one thing.ECL has more surprises.

how about blue sir?

The All Share Price Index hit a 7-week high on Friday with turnover this year broadly unchanged, Acuity Stockbrokers said in a research report.

"Although equity markets through most of 2013 had been largely sluggish from a comparative perspective markets have, in fact, been much stronger than the 2012", the report said.

It noted that the total returns on the benchmark ASPI had shown significant improvement since last year with the index gaining 3.4% year-to-date against a 7% decline in 2012.

"Despite an overall sense of passiveness, markets have been far less volatile this year and the ASPI has consistently managed to find support at the 5,600 point level," the report said.

Turnover levels too have been broadly in line with those of last year declining just 7% year-on-year to Rs.0.83 billion against Rs.0.89 billion in 2012, Acuity said.

"In fact, excluding last year’s significant one-off transaction when Malaysian Sovereign Wealth Fund Khazanah Nasional Berhad purchased a 8.8% (Rs.14.5 billion) stake in key blue chip stock in JKH, year-to-date daily turnover levels have remained unchanged from 2012," the report said.

Acuity noted that the key feature of 2012 was the strong positive foreign investor inflows to equities that continued well into 2013.

Year-to-date net inflows to the CSE totaled Rs.22.44 billion against the previous year’s historic high of Rs.34 billion.

"Excluding the significant Khazanah transaction in JKH however, this year’s net foreign inflows are only 7% lower than in 2012 – Rs.22.44 billion compared to the previous year’s Rs.24.17 billion.

The report further said that corporate earnings for the 12 months to Sept. 2013 too have increased 4.6% year-on-year, "with interest rates having declined 313 bps (to 8.14% from 11.32% in December 2012) and likely to remain low in 2014, prospects for equities appear robust," the report said.

The consensus among analysts suggested continued growth in corporate earnings, Acuity said.

The market edged up last week with both indices closing on a positive note with the ASPI gaining 0.33% (19.30 points) and S&P SL20 up 0.39% (12.46 points).

Ceylon Tea Services was the highest contributor to the week’s turnover contributing Rs.999.4 million or 50.93% of the total. The other top contributors were Commercial Bank (Rs.190.3 million) and HNB (Rs.145.8 million).

Acuity said that foreign participation rebounded with foreigners in a net buying position on Friday with net inflows for the week amounting to Rs.0.25 billion against an outflow of Rs.0.87 million the previous week.

John Keells Stockbrokers reported that the market had recorded marginal gains on the back of mixed sentiment across the board during the holiday week. Activity levels had remained sluggish throughout the week except on Friday when a turnover of Rs.1.3 billion was posted thanks to crossings on Ceylon Tea Services and HNB.
http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=94911

By Azhar Razak

Sri Lanka’s equity market is expecting a promising 2014 with interest rates being currently kept low and expected to hover around the same level for most part of next year and coupled by the recent minimum public float rule which would help boost liquidity, analysts said. According to Director at TKS Securities (Pvt) Ltd Danushka Samarasinghe, since valuations are attractive at the moment, 2014 would be a year where local funds could look to revisit the market though much cannot be expected from retailers as they are still trying to come to terms with the bad experience they had faced in the past where a majority of them were still stuck in stocks that are not fundamentally sound.

“As far as valuations are concerned, in our view, the market is now approaching the bottom and hence we have been advising clients to ‘buy now’ as we expect the equity market to perform towards the end of the first half of 2014,” head of CAL Research Purasisi Jinadasa said.

Sri Lanka’s Treasury Bill (TB) rates have come down much faster in recent weeks. One year TB rates have fallen by 2.85% so far in 2013 of which 2.32% fell during the last six months to 8.53%.

As far as macro economic indications for 2014 were concerned, Head of CAL Research Jinadasa said they expect GDP growth to improve from around 5.8%-6% in 2013 to about 7.0% in 2014, earnings of listed entities to grow by around 5%-10% YoY, inflationary pressure to subside from Year-to-Date figure of 10% (to Nov 2013) to between 7.0%-7.7% whilst 1-year T-bill rates may range between 10.5%-11.7%, although sustainable levels are closer to 12%. However, he cautioned that the Sri Lankan Rupee will face depreciatory pressure of up to 7% (LKR 140/USD) depending on the timing of foreign currency outflows by the government, although the annual average will settle at about LKR 136/USD.

“Due to the macro environment, we are very conservative with our expectations and very selective in our stock recommendations for 2014. There are few gems to look out for. Nevertheless, we expect private credit growth to start picking up during 2H2014 as the slowdown and policy changes witnessed in 2013 takes effect,” Jinadasa said.

When asked what impact the decision by the Federal Reserve or Fed, the central bank of the United States to taper (reduce) massive economic stimulus could have on Sri Lanka, Jinadasa said it would be minimal for the stock market as it has already been accounted for by the larger funds invested in the country.

“Since we are a frontier market, the larger foreign funds would look to exit us after decisions to exit emerging markets have already taken place. The majority of funds invested in Sri Lanka in recent times have frontier funds with investment horizons of 3-5 years. Their investment decisions have already taken tapering into account. So we do not expect a drastic impact,” Jinadasa pointed out.

Delisting scare with minimum public float?

The requirement by Sri Lanka’s securities watchdog for public listed companies to maintain a minimum public float may become counter-productive to the overall objective of attracting more listings to the capital market if some companies opt to de-list on the Exchange when the final rule comes into full effect by end of December 2016, an analyst warned last week.

The analyst who did not wish to be named said that although the SEC imposed the new rule requiring companies listed on the Main Board of the CSE divest 20% and those listed on the Diri Savi Board to divest 10% with good intentions to boost market liquidity the rule might become irrelevant or not practical especially for larger companies.

“Given that the rule itself is a tad too lenient, with those who fail to comply been given extensions, then a 10% penalty and put on the secondary Board, it will be interesting to see how some big companies like James Finlays Plc which has a public float of a mere 2.89% at the moment, Carson Cumberbatch Plc, Sri Lanka Telecom Plc and Nestle Plc would comply with this,” the analyst said pointing out that the extra benefit gained from being listed in terms of tax holidays is only offered to the new listings and not the existing ones.

Presently, there are 226 companies listed on the main board of the CSE and 58 firms on the second board.
- See more at: http://www.nation.lk/edition/biz-news/item/24099-equity-market-expects-eventful-2014.html#sthash.cwCd1kSE.dpuf

prabath wrote:

dudi wrote:expectaions are high that the market will be active in the new year.guys,would like to hear your comments

I'm not recommending shares,Since you want to hear from others I'll tell you one thing.ECL has more surprises.

ECL has come a long way from Rs.5.00.(Price wise) Do you think still they have enough gas?

Leon wrote:

prabath wrote:

dudi wrote:expectaions are high that the market will be active in the new year.guys,would like to hear your comments

I'm not recommending shares,Since you want to hear from others I'll tell you one thing.ECL has more surprises.

ECL has come a long way from Rs.5.00.(Price wise) Do you think still they have enough gas?

aniwa.

prabath wrote:

Leon wrote:

prabath wrote:

dudi wrote:expectaions are high that the market will be active in the new year.guys,would like to hear your comments

I'm not recommending shares,Since you want to hear from others I'll tell you one thing.ECL has more surprises.

ECL has come a long way from Rs.5.00.(Price wise) Do you think still they have enough gas?

aniwa.

14.5 fellows.Told you guys.