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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2738

Sri Lanka: Market holds ground on scheduled peace talks

By Quintus Perera – Asian Tribune

Colombo, 23 October, (Asiantribune.com): The HNB Stockbrokers in their market review indicated that volatility continued in the market this week as investors came into terms with the escalating violence witnessed in the country. Maturity was evident in the way investors reacted to LTTE attacks this week, with the market remaining defiant even amid two suicide attacks being carried out against the military during the week.

The government remaining unchanged in its stance to move forward with peace efforts, despite experiencing heavy casualties, left investors hopeful that peace talks between the LTTE and the government would go ahead as scheduled next week. Wednesday was an example of the extent of optimism prevalent within investors, with the market while initially falling by around 16 points, on news of a LTTE attack on the Galle port, managed to pick up modestly during the day. Comparing Week on Week (WoW) the All share Price Index (ASPI) held ground picking up slightly by 0.7 points to close at 2471.6 points, while the Milanka Price Index (MPI) also showed a very modest 0.4 point increase, closing at 3149.8 points.

NDB shares took centre stage, with substantial quantities of the share changing hands this week. A significant chunk of 7.87 million of NDB shares traded on Monday alone at a price of Rs.160 per share. The selling party was reportedly Renuka Hotels Group, while the buying party was foreign.

Meanwhile a smaller yet notable quantity of around 1 million NDB shares were seen trading on Friday, as a foreign to local trade at a price of Rs.200 per share. NDB thus was the highest contributor towards weekly turnover contributing a significant Rs.1.5 billion towards weekly turnover this week. The counter saw its price appreciate by 7.5 percent compared last week, closing on Friday at Rs.199.50 per share.

Investor appetite seemed unyielding on the speculative counter Touchwood with the counter managing to retain investor interest for yet another week. The Touchwood share price shot up by 19.7 percent this week, with the share closing at Rs.167, while within the week the counter traded at a high of Rs.175 per share, and a low of Rs.132 per share. Touchwood was the second highest contributor towards turnover this week contributing Rs.363.8 million, with approximately 2.3 million shares trading for the week.

The disparity between the contribution towards turnover from NDB and the second highest contributor towards turnover Touchwood, clearly indicates the significant influence the NDB share trades had on market activity this week.

Interest was also witnessed on Telecom counter SLT amid media reports of talks being held between a foreign company and the government to sell of the government holding in SLT. The counter witnessed 10.2 million shares of SLT trade this week, with the share price showing a notable 6.8 percent improvement WoW. The share closed at Rs.23.50 per share on Friday, while trading between a range of Rs.21.25 and Rs.24.25 per share for the week Contribution towards weekly turnover amounted to Rs.238.7 million.

Renewed interest was witnessed in Central Finance counters this week, with the counter managing to come under the top gainers for the week. The share closed at Rs.213.75 per share, showing a 8.8 percent growth compared to last week, while hitting a high of Rs.215 per share for the week. The contribution towards weekly turnover amounted to Rs.127.1 million, while 0.6 million of Central finance shares traded this week.

Turnover for the week rose by 38 percent compared to last week, to total Rs.2.9 billion, while average daily turnover amounted to Rs.589.9 million for the week. Excluding the contribution from the NDB share trade on Monday turnover amounted to a more modest Rs.1.6 billion this
week.

Foreign purchases for the week stood at Rs.1.5 billion, showing a significant 74 percent increase compared to last week. The rise in foreign purchases came in the back of Monday’s trade on NDB shares which saw 7.8 million shares being bought by a foreign entity, contributing Rs.1.4 billion towards purchases for the week.

Meanwhile foreign sales witnessed a 48.2 percent decline this week to total Rs.298.9 million. The resultant net foreign outflow amounted to a significant Rs.1.2 billion this week. Foreign participation for the week fell slightly to 30.4 percent from 33.6 percent of total activity recorded last week.

Amongst the highest traded stocks this week volume wise was, SLT, NDB, Sierra, Vallibel and Tokyo Cement (Non Voting).

In their point of view the HNB Stockbrokers indicted that the volatility continued for yet another week in the market due to alleged LTTE suicide attacks and during the week put the investors into a cautious frame of mind. However the market remained resilient despite macro uncertainties as it maintained the positive trend for the 5th consecutive week.

Week ahead is crucial

Quoting media reports they indicated that the Memorandum of Understanding (MoU) between the United National Party (UNP) and the government is expected to be signed during next week and they reiterate their view on the importance of an agreement between the two main political parties with regard to solving key issues currently faced by the Country.

Towards the latter part of next week the Government and the LTTE are scheduled to meet for peace talks for the first time since February this year. HNB Stockbrokers believe the outcome of these two events scheduled for next week would have a major bearing on the future market performance.

Market to inch forward

The market will remain sensitive to macro developments during the coming week. They expect the market to inch forward in the lead up to peace talks, as investors remain hopeful for a positive outcome. However they feel that the volatility will continue to exist, which would provide investors with trading opportunities during the upcoming week.

- Asian Tribune -

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