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Shares were mixed, in quiet trading as investors took a wait- and- see attitude in the absence of any market moving news. Both indices recorded declines as the trading lacked direction and activity ahead of the judgement on the 19th amendment.

The ASPI ended at 822.39 points, 11.97 points or 1.43% down from the previous Friday's close. Meanwhile, the more sensitive Milanka Price Index was down by 20.65 points to close the week at 1400.73 points.

Local activity remained low with overseas activity also maintaining a low profile, which resulted in a disappointing weekly turnover of 383.42 million.

This accounted for an average daily turnover of Rs.76.68 million.

The purchases were mainly retail driven as the share shot up by Rs.2.75.Ceylon Grain Elevators Ltd together with its parent company Prima Ltd, Singapore controls 73.5% of Three Acre farms Ltd, while the public holds on to only 9.6% of the issued capital of 23.1 million shares.

For the six months ended June 30, 2002 the company recorded a loss of Rs. 79.6 million with the sales declining by 28% to Rs.241 million from the corresponding quarter of the previous year.

The company made a gross loss of Rs 74 million during the six months ended June 30, 2002. According to the company, at present the demand has increased significantly and they have started to make a gross margin of approximately 40%.

Second round of peace talks at the end of the month

With the second round of peace talks around the corner, the incidents at Ampara and Tricomalee were accepted as inevitable by the leadership.

Premier Ranil Wickremesinghe was supposed to be of the view that there'll be many more obstacles when achieving a permanent solution for the ongoing peace process. Unconfirmed reports disclosed that the LTTE leadership were also of the same view as the premier.

The Market declined slightly on bad news of clashes in North-East but picked up soon under thin volumes.

Many investors were not disturbed but preferred to wait for the next step.

The second round of peace talks are scheduled for the last week of October.

However, with both parties looking towards a peaceful environment such minor matters should not cause much concern to the overall peace process.

Next week's activity too would be dominated by the speculation on the 19th Amendment as the deadline for the bill to be presented to parliament falls on October 17.

The approaching release of September ending corporate earnings is expected to create interest in most stocks as companies are expected to bounce back with reasonable growth in profits after last year's depression.

One should buy stocks when current company profits are low and expected future earnings are high.

This is exactly the case now. Therefore the economic and business fundamentals support a medium-term buy.

Barring shocks from the political arena and minor hiccups in the North-East, the outlook for the stock market looks optimistic in the long-run.

Foreigners keep a low profile

Foreign investors were absent from the market as the total foreign purchases amounted to Rs.16.98 million. However, the foreigners ended as net buyers with a net foreign inflow of Rs.6.7 million. It was two months ago that foreign participation reached a peak and contributed significantly towards market turnover.

During the week ended August 23, 2002 the foreign activity turnover was 47% but during the last week it dropped to just 3.4%. However the Colombo bourse has seen Rs.1.93 billion of foreign buying over last two months.

Three Acre Farms heavily traded

Tightly held stock, Three Acre Farms were among the few heavily traded stocks during the week. After a major rally in its parent company Grain Elevators a few weeks ago, a total of 681,300 shares were traded between Rs.11.25 and Rs.14.00. The second round of peace talks are scheduled for the last week of October.

Telecom to buy Mobitel

Sri Lanka Telecom is ready to buy the foreign shareholder in its associate company, Mobitel for $ 9.6 million.

Australian telecom giant Telstra, which owns a majority 60% stake in Mobitel, will sell the stake to SLT, who owns the balance 40% stake.

Mobitel, which started operations in 1992 on a Build, Operate and Transfer (BOT) agreement, has an estimated subscriber base of around 120,000. SLT invested in 22.1 million shares of Rs 10 each, in 1992 and a further Rs.70 million in the mobile operator in 1996 when Mobitel declared a rights issue.

SLT made a post tax profit of Rs.2.1 billion during its year ended December 31, 2001, out of which Rs.50 million was the share of profits from Mobitel.

The purchase of Mobitel will open many options for the market leader in the telecommunication industry, which is to be listed in the Colombo bourse in the near future.

Point of View

Though the market seems to have lost energy needed to breach the critical resistance and make some decent progress, all indicators still remain bullish and the upward trend remains very much intact.

The inert situation in the market due to the political uncertainty has only being further fortified by last week's two minor incidents in the East clouding peace.

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Produced by Lake House
Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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