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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2901

Share Market Further looses ground

By Quintus Perera – Asian Tribune

HNB Stockbrokers in their weekly review indicated that the fall in the market was yet again witnessed this week with the two indices reaching it’s lowest for the year During the first three days All Share Price Index (ASPI) fell by 52.11 points while Milanka Price Index (MPI) had a bigger fall of 78.08 points. On Thursday the market picked up slightly but once again dropped on Friday closing the week at the year’s lowest for ASPI & MPI of 2463.9 & 3400.9 points respectively. Overall the two indices dropped by 2.38 percent & 2.87 percent respectively, compared to last week’s closing levels.

Singer Sri Lanka emerged as the highest contributor to the total market turnover with a contribution of Rs.96.24 million. The counter witnessed an improvement in its share price, which went on to the peak at Rs.69 per share before closing at Rs.68 for the week. The share also saw an appreciation in its stock price of 1.87 percent relatively to last week’s closing price of Rs.66.75.

Ceylinco Insurance ranked number two in its contribution to total market turnover with a value of Rs.79.33 million, which traded between the prices of Rs.170 & Rs.185.The share price saw a drop of 3.33 percent relative to its opening price.

With much talk on SLT, the counter met with some serious issues on its share price with a 10.42 percent decline over the week. On Monday the Supreme Court ordered SLT to reduce its call charges and rental with effect from January 2007. With the anticipated rate revision HNB Stockbrokers have adjusted our earnings forecast for SLT in FY2008 to Rs.6.48 billion from Rs.7.68 billion. The counter opened up with Rs.36 per share before winding up at Rs.32.25. Turnover for the stock was Rs.52.59 million, which is 9 percent of the total market turnover for the week.

The top position again slipped away from JKH, which it managed to gain last week. The contribution from JKH to this week’s market turnover amounted to Rs.16.73 million, 2.87 percent of the total market turnover. It touched a high of Rs.143.25 per share and a low of Rs.138. JKH is another stock which saw negative price change from last week’s closing prices where the stock closed this week at Rs.138 down by 4.16 percent.

The market could not seem to get away from relatively low activity level as the week started with a significantly low turnover of Rs.47.5 million on Monday. The total turnover for the week stood at just Rs.583.5million; down 3.1 percent compared to last week while the daily average turnover indicates a marginal drop of Rs.3.78 to close the week at Rs.116.7million Foreign participation was slightly up this week amounting to 35.12 percent compared to last week’s 32.5 percent leading to a slight increase in net foreign inflow by just Rs.4.5million, closing the week at Rs.314.50 million with foreigners continuing to remain net buyers for the week.

Elpitiya, Lanka Ashok, Regnis, James Finlay & Biraha Farms were among the highest traded stocks for the week.

Meanwhile in their point of view HNB Stockbrokers indicated that the bleak macro picture depressed market further and indices moved further towards negative territory as vulnerable macro environment continued to hurt the investor sentiment. Overall the market lost 60 points during the week compared to last week’s closing levels.

Peace hopes becoming a distant dream

The peace front got heated this week as Norwegian ambassador Hans Brattskar held talks with LTTE leadership in Vanni on Wednesday while government forces captured the LTTE stronghold Thoppigala in the Eastern region on Thursday. The discussions between the LTTE
and the Norwegian ambassador focused on looking at the chances of reviving peace talks.

However according to media reports these discussions ended fruitless as LTTE declined to enter into negotiations with the government. During recent times both parties accused each other for their lack of commitment for peace talks while fighting continued in the North and East region affecting the broader economy and the investor confidence. Furthermore the lack of initiatives on the peace process could further damage the understanding between the two parties making the peace dream even more distant.

From the market’s perspective the current uncertainties in the peace process would continue to keep investors in a cautious mood, thus in our opinion any significant improvement in the market momentum would depend on a positive development in the peace front as peace acts as the single most important factor for the long term economic development of the country.

Negative sentiment to continue

HNB Stockbrokers expect the market sentiment to remain negative on thin volumes until such time a positive news emanate from the peace front. Thus they advice investors with short term investment horizons to be in cash to capitalize on possible trading opportunities in the market place while advising investors with a medium to long term investment horizon to stick to fundamentally sound counters in the Banking, telecom and conglomerate sectors which are currently trading at attractive levels.

- Asian Tribune -

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