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Asian Tribune is published by E-LANKA MEDIA(PVT)Ltd. Vol. 20 No. 81

End of Ceasefire Agreement renders investors to be cautious

By Quintus Perera

HNB Stockbrokers in their weekly review indicated that the Colombo bourse continued to loose ground for the third consecutive week since trading started for the Year. Weakening market conditions owing to intensifying conflicts between LTTE (Liberation Tigers of Tamil Ealam) and the Government of Sri Lanka and other macro shocks have caused the All Share Price Index (ASPI) to lose 158.7 points in total for the year at the completion of the third week of trading for the year. The week closed with the ASPI losing 64.1 points or 2.62 percent to stand at 2382.3 points while the Milanka Price Index (MPI) shed 59.1 points or 1.89 percent to conclude at 3061.2 points.

Distilleries dominated this week’s market turnover representing 10 percent of the total market activity with a contribution of Rs.52.2 million. The high cap counter, which traded a total volume of 0.55 million shares over the week closed down Rs.5/= at Rs.93.25 per share. The bulk of the counter’s activity came on Wednesday, which roughly accounted for 92 percent of Distilleries total turnover for the week.

Following closely was Ceylinco Insurance with a turnover of Rs.49.7 million generated through a trade volume of 0.28 million shares during the week. The share, which fluctuated within the price band of Rs.175 & Rs.180 per share, closed flat at Rs.180 at the end of week’s trading.

Singer Sri Lanka ended up being in the same position as of last week, with the stock continuing to capture investor attention. Over a 0.6 million shares of the counter were traded adding over Rs.39 million to the weekly turnover to become the 3rd largest turnover generator for yet another week. The stock, over the week traded flat at Rs.64.50 per share.

Lanka IOC share price dropped by 3.8 percent to close this week at Rs.19, despite sizable increase in local petrol and diesel prices as well as a drop in world crude oil prices, both of which would have a positive impact on the performance of LIOC. During the week LIOC managed a turnover of Rs.35.6 million to become the 4th largest contributor for the week. The counter saw 1.83 million shares been traded within a range of Rs.19 & Rs.21, also becoming the highest traded stock for the week.

Market turnover for the week fell to Rs.523.3 million from Rs.1.12 billion recorded last week experiencing a notable 55.9 percent drop while the average daily turnover stood at Rs.130.8 million, down by 44.9 percent during the 4 day trading week. Trading volumes in recent times have remained low due to increase in uncertainty.

Foreign participation picked up to 34 percent of all activity compared to 21 percent of last week. Foreign purchases were down by 43.8 percent to Rs.237.6 million while foreign sales totaled to Rs.117.7 million, showing an increase of 47.5 percent, resulting in a net inflow of Rs.119.9 million.

The most traded stocks during the week were Lanka IOC, Kshatriya Holdings, Environmental Resources & Vallibel.

Meanwhile in their weekly point of view HNB Stockbrokers indicated that they could expect little change in the sentiments and the market continued to remain negative with escalating violence dampening the sentiment further. Furthermore the activity levels also remained low with investors reluctant to commit new funds or sell out their existing positions at this point of time.

Overall the market lost 64 points during the week compared to last weeks closing levels. They expect the weak sentiment to prevail in the market place on thin volumes during the coming week. Furthermore if more terrorist attacks take place during the next week the indices would further go down providing bargain-hunting opportunities for the investors having long-term funds. Thus HNB Stockbrokers advice investors to cautiously monitor the market and to exploit opportunities for bargain hunting in the market place.

Trade balance widens as exports in November decline

Although exports showed an encouraging performance during the 1st 10 months of 2007, the November earnings from exports contracted by 5.1 percent widening the cumulative trade deficit in 2007. The export earnings in November stood at US$ 590.9 million, down 5.1 percent compared to corresponding period last year. The decline came in the back of 13.8 percent decline in industrial exports largely due to a drop in earning from textile and garments that constitute 40 percent of the total exports. However the agriculture exports continued the strong performance shown during the last few months with earnings growing by 21.6 percent. The higher tea prices were the main reason behind the surge in Agri-exports.

Meanwhile imports increased by 15.4 percent YoY to US$ 1.01 billion during November 2007, fuelled by sharp increases in investment and intermediate goods. Investment goods increased by 37.3 percent YoY to US$279.5 million while intermediate goods increased by 19.9 percent YoY to US$ 558.6 million. Escalation in intermediate goods was primarily due to a significant 46.7 percent jump in petroleum imports in the back of high global oil prices.

Overall the November 2007 balance of trade recorded a deficit of US$ 418.7 million, 66.1 percent higher compared to US$ 252.1 million in November 2006. Cumulative exports during the 1st 11 months (from Jan to Nov 2007) increased by 11.3 percent to US$ 6.88 billion as against the same period last year while cumulative imports increased by 8 percent to US$ 10.14 billion resulting in a marginal increase in trade deficit by 1.8 percent to US$ 3.26 billion compared to US$ 3.21 billion in the corresponding period last year.

Meanwhile cumulative private remittances continued to grow at a healthy rate of 15.1 percent to stand at US$2.28 billion compared to US$ 1.98 billion in the same period of 2006. The Balance of Payments (BOP) by end of November 2007 stood at US$ 616 million, while the Gross
Official Reserves stood at US$ 3.15 billion by end November 2007.

- Asian Tribune -

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