Cumulative exports increase by Rs. 60 b

Colombo bourse continued to lose ground for the third consecutive week since trading started for the Year. Weakening market conditions owing to intensifying attacks by the LTTE (Liberation Tigers of Tamil Ealam) and other macro shocks have caused the ASPI to lose 158.7 points in total for the year, as we complete just the third week of trading for the year.

The week closed with the ASPI (All Share Price Index) losing 64.1 points or 2.62 per cent to stand at 2382.3 points while the MPI (Milanka Price Index) shed 59.1 points or 1.89 per cent to conclude at 3061.2 points.

Distilleries dominated this week’s market turnover representing 10 per cent of 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 per cent 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 per cent 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% drop while the average daily turnover stood at Rs.130.8 million, down by 44.9% during the 4 day trading week.

Trading volumes in recent times have remained low due to increase uncertainty.

Foreign participation picked up to 34 per cent of all activity compared to 21 per cent of last week.

Foreign purchases were down by 43.8 per cent to Rs.237.6 million while foreign sales totalled to Rs.117.7 million, showing an increase of 47.5 per cent, 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. 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.

We 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 we advice investors to cautiously monitor the market and to exploit opportunities for bargain hunting in the market place.

Although exports showed an encouraging performance during the 1st 10 months of 2007, the November earnings from exports contracted by 5.1 per cent widening the cumulative trade deficit in 2007.

The export earnings in November stood at US$ 590.9 million, down 5.1 per cent compared to corresponding period last year.

The decline came in the back of 13.8 per cent decline in industrial exports largely due to a drop in earning from textile and garments that constitute 40 per cent of the total exports.

However the agriculture exports continued the strong performance shown during the last few months with earnings growing by 21.6 per cent. The higher tea prices were the main reason behind the surge in Agri exports.

Meanwhile imports increased by 15.4 per cent YoY to US$ 1.01 billion during November 2007, fuelled by sharp increases in investment and intermediate goods. Investment goods increased by 37.3 per cent YoY to US$279.5 million while intermediate goods increased by 19.9% YoY to US$ 558.6 million.

Escalation in intermediate goods was primarily due to a significant 46.7 per cent 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 per cent 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 per cent to US$ 6.88 billion as against the same period last year while cumulative imports increased by 8 per cent to US$ 10.14 billion resulting in a marginal increase in trade deficit by 1.8 per cent 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 per cent 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.

“This information has been compiled from sources that we believe to be reliable but we do not hold ourselves responsible for its completeness or accuracy.