September 1, 2018, 8:24 pm
Markets reversed course last week as positive news about the potential return of State-owned pension fund (EPF) to the equity market revived sentiment and helped the Index recover from its 17-month low of 6,010.23 points, Acuity Stockbrokers said in their Share Market Weekly.
" Equities have been on a consistent downtrend over the last five weeks amid (i) lackluster corporate earnings over the June’18 quarter, ii) a Moody’s report highlighting Sri Lanka’s higher-than-peer vulnerability to USD appreciation due to tighter external refinancing conditions in the next five years and, iii) price pressure on corporate heavy-weights in the banking and telecom sectors amid media reports of proposed levies on these two sectors," the report said.
"News of the potential return of the EPF (which was a key institutional player in the domestic equity market and which has been absent from markets since 2015) amid more "sufficient safeguards to improve transparency and accountability in trading guidelines" therefore boosted sentiment significantly, causing the broad-share ASPI to gain 70 points following the news."
The gains on the Index helped offset the 42 point loss at the start of the week, and helped the Index close up ~28 points (0.46%) higher while average daily turnover levels over the week improved marginally from that of the previous week (Rs.0.55Bn cf. Rs 0.48B a week prior), the report noted .
The ASPI lost 1.1% (67 index points) over the month of August, adding on to the 0.8% lost over the month of July, and increasing the YTD loss on the Index to 5.2% from the 3.4% YTD loss recorded in H2’18, Acuity said.
The report noted that the foreign equity sell-off on the Colombo bourse meanwhile eased somewhat over August, with the net foreign outflows over August falling to Rs. 0.59Bn from net foreign outflows of Rs. 1.20Bn over July.
"In the absence of any negative news related to taxes, markets in the week ahead are likely to retain the current momentum," Acuity said.