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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2675

Court order on Sri Lanka Insurance affects stock market

By Quintus Perera – Asian Tribune

Acuity – HNB Stockbrokers Research in their weekly review indicated that market remained silent for most part of the week as shares suffered on early profit taking following weeks of sharp gains. Further on Thursday the court ruling against the privatization of Distilleries group Company Sri Lanka Insurance impacted adversely on overall market sentiment. However the indices picked up on Friday with both indices gaining moderately. The All Share Price Index (ASPI) closed the week at 2178.1 points down by 37.9 points or 1.7%, compared to last week, meanwhile the Milanka Price Index (MPI) showed a notable 72.2 point or 2.9% dip to close at 2447.6 points.

The highest contributor towards turnover for the week was S.M.Leasing (SMLL), which contributed Rs.448.4 million. On Friday Peoples Leasing Company reportedly acquired a stake consisting of 84.5% of SMLL at a price of Rs. 23.00 per share. However WoW the share price of the counter observed a 1.2% decline compared to last week. The share closed at Rs.21.00 per share, while trading at a high of Rs.20.50 and a low of Rs.22.25 per share for the week.

NDB saw its share price declining by 0.8% during the week, to close at Rs.119.00 per share, while trading at a high of Rs.125.00 and a low of Rs.114.00 per share. The counter was the second highest contributor towards turnover this week with contribution towards weekly turnover amounting to Rs.254.9 million. 2.2 million shares of NDB traded during the week Distilleries was among the top losers this week, with the share price shedding 13.0% WoW, to close at Rs.79.00 per share. Distilleries’ was seen actively trading ahead of the court ruling with a total of 2.9 million shares trading for the week adding Rs.249.0 million to the week’s turnover. The counter traded within the range of Rs.66.00 per share and Rs.97.00 per share for the week.

Notable quantities of JKH shares were seen trading this week, with the most part of shares trading on Friday. The share contributed Rs.222.2 million towards turnover, becoming the fourth highest contributor towards total turnover for the week. The counter traded within a range of Rs.109.00 and Rs.115.5 per share to close the week at Rs.111.00 per share, down by 3.7% WoW. Total volume traded of JKH amounted to 2.0 million.

Total turnover amounted to Rs.2.7 billion this week, with the average daily turnover amounting to Rs.533.5 million. WoW activity levels were down by 46.6%. Friday posted the highest daily turnover for the week amounting to Rs.1.1 billion with S.M. Leasing strategic deal taking place. Foreign investors were net buyers this week after a period of two weeks amounting to Rs.240.3 million.

Foreign purchase for the week amounted to Rs.916.5 million, while foreign sales amounted to Rs.676.2 million. Foreign participation for the week stood at a notable 29.9% of total activity this week. Among the highest traded stocks in terms of volume for the week were Janashakthi, S.M. Leasing, Pan Asia Distilleries and Seylan Merchant (Non Voting).

Acuity in their point of view indicated that as expected by them, the market was extremely volatile this week with healthy activity levels. The All Share Price Index (ASPI) lost 1.7% during the week while the sensitive Milanka Price Index (MPI) declined by 2.9% compared to last week.

The indices are likely to remain volatile in the coming week amidst a mix of profit taking and bargain hunting at regular intervals. Therefore they advice investors to focus on the possible trading opportunities in the market place while continuing to accumulate fundamentally sound stocks that are trading at attractive levels.

In their economic update Acuity indicated that Sri Lanka’s 12-month inflation rose to 3.3% YoY in May after having fallen for seven straight months to 2.9% YoY by the end of April. Annual average inflation, however, continued on its decelerating path to reach 14.7% by the end of May, down from 16.7% in April. Inflation in May was largely fueled by the index heavy food category, which jumped 3.3% during the month. Though month on month prices will likely be upward, Acuity projections indicate that inflation will stay close to current low levels in the near term as relative risk averseness continue to dominate economic activity.

However, the relaxation of monetary policy by Central Bank through relatively aggressive rate cuts has begun to affect inflation expectations and will ultimately affect the price levels through demand side pressures.

Furthermore, the expected recovery of the economy and relatively higher commodity prices will begin to affect price levels in the second half of the year. Thus their projections indicate point-to-point inflation taking an upward trend after bottoming out in the next couple of months, however, annual average will continue to fall and reach single digit levels. Acuity estimates for June show YoY inflation falling to 1.3% and annual average inflation easing further to 12.5%.

- Asian Tribune -

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