Business

SEC turnover increases in 2005

The tsunami disaster resulted in the Bourse losing a substantial 5% in the final week of trading for the year.

But with countries around the world providing extensive financial assistance and other forms of aid, investor confidence was restored and 2005 commenced on positive grounds with the first week seeing both indices gaining considerably to recover most of the lost 5%.

Progressing from 2004 when the market achieved a growth of 40% YoY, 2005 also showed much promise with the ASPI showing a record growth of a massive 70% in the period from January to mid November 2005, during which the ASPI crossed the 2,000 threshold for the first time in July.

The Bourse geared up for the Presidential elections that were held on the November 17 with both ASPI and MPI significantly increasing in the days leading upto it but with the unexpected violence in the north since December which upto now has claimed the lives to over 120 people also greatly contributed to the market's drastic slip sliding behaviour resulting in the market losing 24% in those 1 1/2 months alone.

Thus the trading year ended on a disappointing note with the ASPI and MPI closing at 1,922.21 and 2,451.06 respectively, reflecting an overall growth for 2005 of only 27.55% in the ASPI and 18.19% in the MPI.

The IPO craze continued into 2005 with four new companies being listed on the Colombo Stock Exchange and another listed company raising additional capital. Mobile Communication provider Dialog entered the market on July 28, 2005 replacing LIOC as the largest IPO in Sri Lanka, with a total of 712,336,293 shares being issued at Rs. 12.

This Telecom giant, whose shares closed the trading year at Rs. 16.50 and reached an all time high of Rs. 22.50 and a low of Rs. 14, is at present the biggest company in terms of market value at Rs. 127 BN, taking up a considerable 21% of total market cap.

Dialog also enabled the telecom sector to be pulled up to first place market cap wise with a sum of Rs. 148.68 BN as at the end of December 2005 while it had a total of only Rs. 27.9 BN as at the end of 2004.

Cable manufacturer Sierra which was oversubscribed by 20 times, followed suit and was quoted in November by issuing 200 MN shares at rs. 3, which are currently trading at Rs. 2.50 levels having lost around 15% on the issue price. During the course of the year, Vidullanka Ltd and PABC Bank both obtained listings for their shares amounting to 23,850,007 shares and 55,571.883 shares respectively.

Meanwhile, HDFC Bank which was listed in 2003, raised further capital in 2005 through a public offering of 2,500,000 shares at Rs. 220.

One year down the road post Tsunami has left the battered Hotels and travels sector still struggling to recover. Coastal hotels owned by JKH, Aitken Spence, Confifi and Connaissance were among the damaged and these companies invested heavily in refurbishment, but arrivals of leisure travellers failed to pick up with foreign guest nights of all graded hotels declining resulting in this sector recording significant drops in all 4 quarters.

The hotels sector which is a sub sector of the services sector posted a cumulative GDP of Rs. 3.3 BN for the first 3 quarters of 2005, reflecting a 32.3% drop from the previous year.

However, the construction sector grew by on average 6% every quarter due to rebuilding efforts on tsunami affected roads, railways and hotels, resulting in companies such as Tokyo Cement, ACL Cables etc benefiting.

Turnover levels improved by 94% YoY to Rs. 114,59 BN, mostly due to the healthy political climate prevailing in the first 9 months, and the Bourse recorded an average daily turnover of Rs. 481.5 MN. Foreign interest was also seen to double during the year, adding to local investor confidence,e with the net foreign inflow for 2005 being Rs. 6.14 BN.

Since the market is very highly politically oriented, performance in 2006 will depend on any positive developments in this arena and sound investments in high growth potential sectors such as telecom, banks, finance and insurance, healthcare, food, beverage and tobacco, diversified and manufacturing are advised.

Courtesy: Bartleet Marllery Stockbrockers (Pvt) Ltd.

Key Market Indicators 2005 2004 2003 ASPI 1922.21 1062.10 815.10 MPI 2451.06 1897.80 1374.60 MKT CAP (Rs. BN) 584 339.16 241.47 MKT PER 12.39 10.80 11.10 MKT PBV 1.65 1.30 1.10 Total T/O (Rs. BN) 114.59 60.03 73.80 Ave Daily T/O (Rs. MN) 481.50 250.13 307.60 Net Foreign Inflow/ Outflow (Rs. BN) 6.14 1.10 .20