Sri Lanka: December Stocks yield high returns

Acuity Stockbrokers (Pvt) Ltd in their weekly market review indicated that stocks rose further since All Share Price Index (ASPI) reaching its peak high last week, sending the benchmark index above its highest close ever, on Thursday to close at 3292.8 points.

The week started off with indices sustaining the positive trend from last week, however, witnessing a minor set back on Wednesday. Comparing Week on Week the ASPI improved by 103.9 points or 3.3% to 3292.8 points compared last week, while the Milanka Price Index (MPI) gained by 146.8 points or 4.0%, to close above last week’s closing level at 3777.2 points.

Similar to what was witnessed last week, JKH managed to drive the market this week as well, becoming both the highest traded stock and the highest contributor towards weekly turnover. Around 5.8 million JKH shares traded this week. Contribution towards weekly turnover amounted to Rs.982.7 million. The share closed at Rs.170.25 per share gaining 6.1% Week on Week (WoW). During the week the counter traded between a wide range of Rs.160.00 and Rs.180.00 per share.

JKH was the top contributor on three of the four trading days during the week. Meanwhile other blue chip counters to lead in terms of contribution to weekly activity were HNB, AHOT Properties, NDB with Rs.705.3 million, Rs.439.3 million and Rs.422.5 million contributions respectively.

Renewed interest on Aitken Spence saw its share price gain an impressive 19.9% to close the week at Rs.1198.75 per share whilst managing a contribution of Rs.170.2 million towards market turnover.

Total turnover stood at Rs.4.6 billion while the average daily turnover amounted to Rs.1.2 billion for the week. Turnover this week was down by 49.1% compared to last week.

Foreign investors were net sellers this week amounting to a staggering Rs.1.6 billion. Foreign purchases showed a 92.1% decline compared to last week to total Rs.464.8 million, while foreign sale witnessed a 41.5% drop to amount to Rs.2.1 billion. Foreign participation saw a dip this week which stood at 27.6% of total activity compared to 52% posted last week indicating the strong input by local investors.

The highest traded stocks for the week were JKH, AHOT Properties, HNB, Seylan Bank (Non Voting), Janashakthi Insurance and Piramal Glass.

ASL in their weekly point of view indicated the momentum should continue and that the week ended 24/12/2009 saw the ASPI moving from 3188.8 points to 3292.8 points amounting to 103.9 points while the MPI moving from 3630.5 points to 3777.2 points amounting to 146.8 points.

The bourse was predominantly up during the concluded “four day” week. Heavy local buying was witnessed during the week, compared to foreign purchases, which only accounted for 10.04% of total purchases value for the week. The local buying pressure was created by local institutions and high net worth clients.

However, the all expected “respite”, from the market was not seen during the week. However, with a three day week coming ahead, and with the current buying pressure we expect the market to sustain the upbeat with less steam.

In their Economic Snapshot ASL indicated that Sri Lanka economy recorded a positive growth of 4.2% during the Q3 of 2009. The YoY growth rates for each of the quarters have been progressively improving during the year 2009. The economic growth rate of Q3 was mainly supported by relatively high growth of 5.1% from the Service sector.

The agriculture sector decelerated to a growth of 0.9% YoY (compared to a Q3 growth of 12% in 2008) and the Industry sector recorded a growth of 4.4% YoY. The contribution to the GDP from the agriculture sector was 12.2% and from the Industry and the Service sectors were 28.3% and 59.5% respectively.

ASL indicated that the trade data was released recently for the month of October. Earnings from exports continued the uptrend, which was witnessed from the month of April. Albeit, the setback witnessed during September. Expenditure from the imports surged during the month of October, from the levels of September.

However, both Exports and Imports showed a decline of 4.9% and 18% YoY, compared to the 2008 levels.

The trade deficit was at US$ 369.6 Million during October, which was a decline (improvement) of 33.6% YoY, compared to a deficit of US$ 556.4 Million during October 2008.

Hence, the cumulative trade deficit was at US$ 2.2 Billion for the period Jan- Sep 2009, compared to a US$ 5.7 Billion during the same period 2008. Hence, a decline (improvement) of 57.1%.

Offsetting the deficit, the cumulative (Jan-Oct 2009) workers remittance grew 12.9% YoY to US$ 2.8 Billion. Thus, showing healthy inflows.

They indicated that the rate of inflation, as measured by the point-to-point change in the Colombo consumers’ Price Index (CCPI)(2002=100), recorded 2.8% in Nov, (YoY %) 2009 a further increase from 1.4% in Sep, 2009. The annual average inflation rate declined further to 4.1%, compared to 5.2% in Oct 2009, continuing its decelerating path recorded since November, 2008.

ASL indicated that the gross official reserves were at US $ 5.3 Billion (with the Asian Clearing Union funds) by the end of November. This comprises of short term net inflows to the Government treasury bills, treasury bonds and the tranches of the IMF stand By Facility. Based on the previous 12 month average imports (US $ 834 Million per month), the gross official reserves were equivalent to 6.4 months of imports.

- Asian Tribune -