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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2527

Investors in a cautious mood to drop the activity levels

By Quintus Perera – Asian Tribune

HNB Stockbrokers in their weekly review indicated that t he Colombo bourse witnessed a quiet week as investors cautiously waited for more corporate earnings. Week on Week (WoW) the All Share Price Index (ASPI) closed down by 17.4 points to stand at 2414.4 points while the more sensitive Milanka Price Index (MPI) declined by 28.4 points or 1 percent to 2812.0 points.

Major contribution this week came from CIC (voting), which amounted to Rs.136.3 million, accounting for almost 17.9 percent of the total weekly turnover. The week saw heavy trading on CIC (voting) shares on all five days, while in total the volume traded stood at 3.1 million for the week. The counter edged up by a substantial 10.6 percent during the week to close at Rs.44.25, after having traded between the prices of Rs.40.25 and Rs.45.25 per share.

Similarly the CIC (non voting) too was on spotlight this week as the counter managed a contribution of Rs.24.7 million towards the weekly turnover, the 6th highest for the week. However the CIC (non voting) share price slipped 1.7 percent during the week to close at Rs.29.50 per share on Friday.

The 2nd largest contributor towards market activity was the illiquid palm oil stock Bukit Darah, with a total contribution of Rs.54.4 million. At Friday’s close the counter was up by 3.2 percent to Rs.1599.25. During the week 0.03 million shares changed hands with bulk of the activity on the Stock taking place on Monday.

JKH also witnessed 0.41 million of it’s shares trading during the week contributing Rs.41.6 million towards weekly turnover. The counter during the week traded within a narrow price band of Rs.100.00 and Rs.102.75 while closing at Rs.100 on Friday, marginally down compared to the previous week’s closing.

AMW also remained among investor attention this week. The counter managed a turnover of Rs.34.6 million with a total of 0.2 million shares trading for the week. AMW traded at a high of Rs.174.5 and a low of Rs.169.0 during the week, while closing unchanged for the week at Rs.174.50 per share.

Overall the activity levels dropped considerably this week by 26.5 percent to stand at Rs.763.4 million compared to Rs.1.04 billion recorded the week before. Meanwhile the average daily turnover stood at Rs.152.7 million during the week as against Rs.207.6 million posted last week.

Foreign investors remained net buyers amounting to Rs.106.5 million this week, with foreign participation standing unchanged at 19.0 percent of total activity. Foreign purchases for the week stood at Rs.198.2 million, up 30.3 percent from last week while foreign sales witnessed a decline of 62.5 percent to stand at Rs.91.7 million.

The most actively traded stocks for the week were Nawaloka, CIC (voting), Sierra and Seylan Merchant (non voting).

Meanwhile in their point of view HNB Stockbrokers indicated that Market turned dull during the week with investors getting into a shell amidst mixed corporate earnings. The All Share Price Index (ASPI) lost 17.4 points while Milanka Price Index (MPI) lost 28.4 points compared to last week’s closing levels.

Lackluster sentiment is likely to continue in the coming week with investors adopting a cautious approach. Though they don’t see heavy volatility in the coming week HNB Stockbrokers advise investors to slowly accumulate fundamentally sound counters with a medium to long-term view.

In their Economic Update HNB Stockbrokers indicated that a drop in export earnings coupled with continued pressure from higher petroleum related imports caused the trade deficit to expand further for yet another month in June.

Total exports earnings for the month of June recorded a 1.9 percent decline YoY to US$ 654.6 million, largely due to relatively lower industrial exports during the period. Textiles & garments, which comprise the major portion of industrial exports plunged 8.9 percent YoY to US$ 262.8 million while relatively lower contributions from several other categories such as food & beverages and machinery & equipment too accounted for the drop in export earnings.

Nevertheless, agricultural exports continued to show commendable growth recording a 34.6 percent YoY increase primarily backed by tea exports, which rose by 41.7 percent YoY to US$ 117.2 million in June.

Imports, however, continued to accelerate recording a significant YoY increase of 39.4 percent amounting to US$ 1,159.1 million in the month of June. Expenditure on intermediate goods surged once more in June attributed largely to higher petroleum costs. Petroleum imports rose 159.3 percent YoY during the month to US$ 339.9 million fueling a 52.3 percent increase in intermediate goods to US$ 700.1 million.

Meanwhile expenditure on consumer and investment goods too witnessed 29.6 percent and 17.7 percent increases on a YoY basis during the month to US$ 210.9 million and US$ 238.4 million respectively. Plunging exports as against the accelerated rise in imports resulted in a trade deficit of US$ 504.5 million in the month of June, up sharply by 206.9 percent than the deficit recorded in the comparable month of last year.

Nevertheless cumulative exports from January to June showed a 9.8 percent YoY growth to US$ 3.89 billion while the cumulative imports stood at US$ 6.97 billion, up by 35.6 percent compared to the corresponding period of last year (Jan – Jun 2007). This resulted in an overall trade deficit US$ 3.08 billion for the first six months of 2008. However, healthy private remittances, which amounted to US$ 1,460 million during the first half, together with higher capital and financial flows led to an overall balance of payment surplus of US$ 390 million by end of June 2008. The gross official reserves stood at US$ 3.43 billion as at 30th June, which was sufficient to finance around 3.1 months of imports.

- Asian Tribune -

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