FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.
FINANCIAL CHRONICLE™

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka

LISTED COMPANIES

Submit Post


ADVERTISE
Poll

EXCHANGE RATE PREDICTION: 2022

 
 
 
 

View results

ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post


CONATCT US


Send your suggestions and comments

* - required fields

Read FINANCIAL CHRONICLE™ Disclaimer



Latest topics

» Expolanka to continue its winning streak
by samaritan Today at 4:12 pm

» The war in Ukraine is no longer shocking the wheat market
by ResearchMan Today at 12:53 pm

» Govt gets its priorities wrong
by samaritan Today at 10:25 am

» Ambassador assures U.S. support to Sri Lanka to find solutions to economic issues
by samaritan Today at 10:16 am

» IMF-Sri Lanka bailout talks end without a deal
by ChooBoy Today at 9:16 am

» Sri Lanka Breaks Into Hyperinflation Zone Amid Dollar Crunch
by CHRONICLE™ Today at 8:11 am

» Sri Lanka needs to do more on debt restructuring before a bailout package is finalised, says IMF
by CHRONICLE™ Today at 8:06 am

» Global COVID cases rise as BA.4 and BA.5 expand
by samaritan Today at 7:04 am

» POSITIVES & TARGETS BY IMTIAZ BUHARDEEN
by Gowri123 Wed Jun 29, 2022 4:38 pm

» When will supply chain disruptions ease?
by Gowri123 Wed Jun 29, 2022 4:08 pm

» We’re seeing a shift toward international and value stocks, says Schwab’s Kleintop
by target1 Wed Jun 29, 2022 2:40 am

» Wall Street stumbles as consumer pessimism stokes growth fears
by target1 Wed Jun 29, 2022 2:34 am

» Free Market Capitalism vs. Crony Capitalism
by target1 Wed Jun 29, 2022 2:30 am

» Sri Lankan corporations reap large profits as workers and rural toilers face poverty and starvation
by CHRONICLE™ Tue Jun 28, 2022 6:37 pm

» අද රාත්‍රියෙන් පසු, යක්ෂයාගේ හෝරාව ඇරඹේ!
by God Father Tue Jun 28, 2022 6:13 pm

» Derana 360 with Minister Dhammika Perera
by samaritan Tue Jun 28, 2022 1:07 pm

» CENTRAL INDUSTRIES PLC (CIND.N0000)
by LHW Tue Jun 28, 2022 9:24 am

» Breaking News- Kanchana to go to Qatar ; 2 more ministers off to Russia
by Beyondsenses Tue Jun 28, 2022 8:13 am

» PM thanks President Biden for assuring US support to Sri Lanka
by Beyondsenses Tue Jun 28, 2022 8:07 am

» Sri Lanka Stock Market heading toward ASPI 4500
by God Father Mon Jun 27, 2022 9:14 pm

EXPERT CHRONICLE™

MARKET CHAT


CHRONICLE™ ANALYTICS


ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)


CHRONICLE™ YouTube

LATEST TWEETS

You are not connected. Please login or register

FINANCIAL CHRONICLE™ » EXPERT CHRONICLE™ » First Capital advises investors to cut equity exposure and increase cash as ASPI breached its fair value

First Capital advises investors to cut equity exposure and increase cash as ASPI breached its fair value

Go down  Message [Page 1 of 1]

CHRONICLE™

CHRONICLE™
Admin

First Capital advises investors to cut equity exposure and increase cash as ASPI breached its fair value E9we2m10

As the Colombo Stock Exchange continues to set new daily records, defying the effects of the broader economy from the lockdowns in effect since last Friday, First Capital Research (FCR) said it was time to cut exposure to equity and increase the cash holdings, as the All Share Price Index (ASPI) breached its fair value, which is at between the 7,500 and 8,000 range, a stance the research firm held since June this year.

Sri Lanka’s shares hit new back-to-back highs on Monday and Tuesday, with its benchmark ASPI closing at 8,667.30 points on Tuesday, up 2.22 percent or 188.30 points after touching a mid-day high of 8,815.08 points, as local retail investors continued to collect shares of counters earning dollar incomes.  The S&P SL20 index, consisting of the most liquid stocks, ended at 3,175.73 points, up 0.88 percent or 27.77 points on Tuesday.

First Capital advises investors to cut equity exposure and increase cash as ASPI breached its fair value Screen63

However, FCR advised the investors to cut their exposure to shares by a further 25 percent to 65 percent, from 90 percent and increase cash allocation by the same amount to 35 percent, from 10 percent, as the fair value of the ASPI stands between 7,500 and 8,000 points.

“The ASPI surged, passing the 8,000 mark for the second time in 2021. We believe that the fair value for the ASPI stands at 7,500-8,000, considering the earnings that listed companies are generating and the risks in the system, due to economic uncertainty,” wrote FCR Head of Research Dimantha Mathew.

“The CBSL’s rate hike may also input additional pressure on interest rates adversely impacting equity investments,” he added in a note issued earlier this week.

In June, FCR upgraded the ASPI’s fair value to a range of 7,500 to 8,000, from its earlier 7,000 to 7,500 range, considering the higher liquidity in the system and cheaper valuations, due to healthy earnings, although the economic outlook was growing uncertain, due to significant risks that were building up.

While the higher range amounts to a market return of +18 percent for 2021, the research firm recommended the investors to hold on to the equity allocation while the ASPI stays during the said range and begin exiting beyond 8,000.

As the market remains expensive now with the ASPI above 8,000, in one option offered to equity investors, FCR advised to gradually start reducing the exposure from an ASPI level of 8,200, as there were a number of illiquid counters, which had driven the market.

“But remember to reduce exposure to 65 percent and continue to reduce further, as the market climbs to higher levels, which may provide the investor an opportunity to buy, if the market goes through a correction,” Mathew wrote.

In the second option, First Capital asked to switch the portfolio into more defensive and high dividend yielding counters, if the desire is to hold on to the exposure.

“If you are an investor who would want to continue your exposure, then the ideal way to protect your capital would be to move into value counters such as banking and dollar income companies (Eg: TJL, HAYL, EXPO, HAYC, WIND, LVEF) while high dividend yielding companies mostly in the food, beverage and tobacco sector and material sector are preferred (Eg: CTC, NEST, LLUB),” he said.

“The life insurance sector could also be highlighted, as the sector benefits from rising interest rates,” he added.
Earlier this week, Mathew said the current bull run, similar to the one in January, could continue till the ASPI reaches the 9,000 level, before settling around 7,500 levels.

https://www.dailymirror.lk/business-news/First-Capital-advises-investors-to-cut-equity-exposure-and-increase-cash-as-ASPI-breached-its-fair-value/273-219015

https://www.srilankachronicle.com
Share this post on: redditgoogle

No Comment.

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum