The bourse which witnessed steady upward momentum during Monday and Thursday witnessed a 36 point dip on Friday possibly due to profit taking the weekly market volume and turnover stood above the 12-month average. Whilst foreign investors continued to be in a buying sentiment during the week. Further the daily average turnover for the week increased to LKR 1,630.5mn against LKR 996.9mn recorded during the previous week. Meanwhile the week recorded a total share volume of 274.6mn against 216.2mn recorded in the previous week, which is a 27% WoW gain.
The gradual decline in market interest rates together with improvement shown in several macro economic variables is likely to have lured local
and foreign investors towards CSE. Meanwhile the T-bill yields fell drastically during the weekly auction held on Monday with yield on 182-days and 364-days reaching the lowest since October 2010.
John Keells Holdings which witnessed few crossings during the week emerged as the week’s top turnover contributor adding c. 24% to the week’s total turnover. Pan Asia Power emerged as the highest volume traded stock for the week with a cumulative 48.9mn shares being traded.
Counters such as Hatton National Bank, Commercial Bank of Ceylon, Chevron Lubricants, Kelani Tyres etc also witnessed crossings during the week.
The week saw foreign purchases amounting to LKR 2,223.8mn whilst foreign sales amounted to LKR1,682.7mn. Market
capitalisation stood at LKR 2,550.7bn and the YTD performance is 3.7%.
Conclusion: Active foreign and local intuitional participation energizes the market
Despite a three day trading week, overall market registered a WoW gain close to 1.0%, whilst activity levels also postured steady signs with average daily turnovers and volumes gaining 64.0% and 112.0% WoW respectively.
Meanwhile, foreign participation was quite significant whilst being a driving factor where the week reported a 2.8% WoW rise in purchases whilst foreign sales dropped 13.2% WoW brining in a net inflow of over LKR 541mn for the week. This demonstrates that foreigners are continuing to place their confidence in the local economy as witnessed during the past 2 years, which also strengthens the local investor sentiments.
However, on the flipside the World Bank adopted a cautious note on the country despite the country’s GDP growth (7.4%- 2014) projected to be above the South Asian region (5.7%-2014) due to the high level of external debt, current account deficit and openness to capital outflows which makes it vulnerable towards possible tightening of international financial conditions. Nevertheless, despite such a situation the country experienced a net foreign inflow to the market of c.LKR 23.0bn in 2013. Therefore, with the IMF predicting global growth to pick up further during 2014 and emphasizing more on the US recovery the Colombo bourse is poised for better returns.
To read the entire Report: http://research.srilankaequity.com/t879-17-01-2014-weekly-review-asia-wealth-management-co-ltd