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| Monday, 11 October 2004 |
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HNB Stockbrokers' weekly market review Market to remain flat The market remained flat for yet another week, as the indices were seen showing blips of movement. The ASPI showed slight movement during the course of the week, to close the week at 1449.2 points down marginally by 0.01% compared to last week's closing. Meanwhile the Milanka Price Index (MPI) showed a downward trend during the week to close at 2141.4 down 0.33% from compared to last week. Turnover for the week showed an increase of 43.7% to total Rs. 976.6 million at the close of the week compared to last weeks turnover level of Rs. 679.7 million. The daily average turnover for the week stood at Rs. 195.9 million. Foreign purchases for the week totaled Rs.157.1 million up marginally by 39.1% from last week, while foreign sales showed an increase of 358.2% to Rs.189.7 million at the close of the week. This resulted in a net foreign outflow of Rs. 32.6 million. Foreign participation for the week, stood at 17.75% of total activity showing an increase from last week's participation level of 11.3%. An increased participation was observed in selected Banking, Finance and Insurance sector with, Nations Trust Bank, Ceylinco Insurance and The Finance shares being heavily traded within the week. Approximately 2.6 million and 2.1 million of Nations Trust counters traded on Thursday and Friday respectively, as the International Finance Corporation (IFC) sold its stake, thus contributing substantially to this week's total turnover. The counter traded at price levels between Rs. 21.00 - Rs. 21.75, before closing at Rs. 21.50 on Friday. Interest on Ceylinco Insurance shares were sparked, with Elgin fund and high net worth investor Rusi Captain buying in a considerable amount of shares on Monday. Investor Rusi Captain increased his share in Ceylinco to over 1 million on Monday, buying approximately 300,000 shares, while Elgin fund bought approximately 500,000 shares on Monday. Approximately, 2.57 million Ceylinco counters traded for the week, with approximately 507,562 Shares on average trading daily. The counter traded between a low of Rs. 44 and a high of Rs. 49.25 during the week. To close at Rs. 50 on Friday. Ceylinco Insurance posted a net profit of Rs. 267 million during FY2003, which was an increase of 18.2% compared to net profits posted in FY2002. The PER based on FY2003 earnings stood at 2.8x. During the first half of this year Ceylinco had managed to post a net profit of Rs. 49.1 million, which saw an increase of 9.6% from the corresponding period last year. Counters that were being heavily traded during the week were Vanik Incorparation Ltd., Nations Trust, East West, Ceylinco Insurance and The Finance. Energy crisis: Alternative options and energy saving is the solution Global oil prices continued its upward momentum reaching US$52.62 per barrel during the week. We expect these prices to fluctuate in a wide range in the coming weeks, thus creating clear uncertainty towards the economic growth. Furthermore, we feel that the corporates should learn to live with these rising oil prices, than expecting them to fall sharply. Therefore, companies should look for better energy preservation and increased productivity thus reducing the total energy costs through reduction in wastage. From government's point of view, steps should be taken in order to reduce the heavy dependence towards thermal power, as country' dependence on such mode has increased significantly over the past few years. Furthermore it is vital that the establishment of Norachcholai coal power plant and Kotmale hydro power plant go through a speedy implementation, in order to avoid an unbearable energy cost. Market to remain flat We expect the indices to remain flat while the indices are expected to be volatile in a narrow range, amid continued profit taking and bargain hunting. Selected stocks would still offer trading opportunities but we advise the investors to book the profits where possible, while looking for bargain hunting in the back of a market correction. Peace; still a hope than a certainty In a recent visit to the Jaffna peninsula, we observed the tremendous potential for development in these areas if investor confidence could be build up. At this moment, the business community, religious leaders and masses live in hope more than a certainty of peace. As a result no long-term projects are being kick started by private investors, except for specific developments through donor agencies. Most of the local businessmen are continuing their day-to-day operations, rather than looking for opportunities for expansion, acquisitions and new ventures. We feel that this thinking could only be revolutions over a period of time through consistent progress in peace process. However when building such confidence, no party should not look for cheap political gains, which we envisage as a clear obstacle when considering the present set up. Therefore we conclude that the peace process has reached a crucial stage and needs support from all parties including the government, LTTE, Opposition and international organisations. While emphasising the need to build up the confidence level, we believe that it is essential to kick start the talks, while understanding each other's needs. The views based herein are expressed with no malafied intension to any party whatsoever based on already published data and from the information obtained by the research team. No matter published as above creates any liability of any kind whatsoever on HNB Stock Brokers Pvt Ltd or its associates. The views cannot be reproduced in any form without the explicit (written or otherwise and photocopied) permission from HNB Stock Brokers (Pvt) Ltd. |
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