regains momentum after festive holidays
The market ended higher for the week with the indices showing an
upward trend on all three days of the week.
Interest on few selected plantation stocks lifted retail investor
sentiment on their return to trading after the holiday break.
The ASPI (All Share Price Index) gained 57.2 points or 2.19 per cent
close up at 2,671.8 points while the liquid MPI (Milanka Price Index)
edged up 73 points or 2.23 per cent to 3348.7 points at week's close.
SLT led market activity this week, boosting up the weekly turnover
with the 32 million deal on Wednesday.
Overall the counter's contribution to the week's activity amounted to
Rs. 2 billion reflecting 78 per cent of the total market turnover.
Several large quantities of SLT were seen actively trading closer to the
The SLT share meanwhile rose to Rs. 49.5 before closing at Rs. 49.25
per share, which is a gain of 1.03 per cent for the week.
Renewed interest pushed up the activity levels of the banking stock
NDB, which made a contribution of Rs. 51.1 million, witnessing a rise of
1.47 per cent in price. WoW NDB surged by Rs. 2.50 to close at Rs.
172.50 per share. A total of 0.3 million of NDB shares traded during the
Contributing Rs. 29.2 million to the weekly market turnover was the
high cap conglomerate Hayleys, which traded a total volume of 0.3
million shares. The stock managed a 1.82 per cent gain WoW to close at
Rs. 98 per share. The counter during the week traded within a price
range of Rs. 97.25 and Rs. 98 per share.
Investor interest on Overseas Realty saw the share price gaining 7.4
per cent to Rs. 14.5 whilst trading around 1.74 million shares during
the week becoming one of the most actively traded stocks for the week.
The share price meanwhile ended Rs. 1 up at Rs. 14.5 from last weeks
The foreign party deal on SLT which took place on Wednesday helped
boost the otherwise weak market turnover which stood at Rs. 2.6 billion
during the three day week. The trading started fairly dull on market's
first trading day after a four-day weekend.
However week on week the total market turnover was up 15.2 per cent
while the average daily turnover stood at Rs. 861 million, showing an
increase of 53.6 per cent.
Foreign purchases for the week stood at Rs. 2.1 billion while foreign
sales for the week totalled to Rs. 1.9 billion resulting in a net
foreign inflow of Rs. 174 million for the week.
The foreign participation for the week stood at 78.7 per cent of the
total activity showing a slight increase compared to 71.5 per cent level
last week. SLT, Blue Diamonds (Non Voting), Overseas Realty and Pan Asia
were among the heavily traded stocks during the week.
Focus on corporate
Positive sentiment continued in the marketplace despite the holiday
mood. Activity was witnessed mainly on the plantation sector counters in
the back of strong earnings expectations during the 1st quarter of 2008.
During the week All Share Price Index (ASPI) gained by 57.2 points while
the sensitive Milanka Price Index (MPI) increased by 73 points.
In the week ahead we expect the activity levels to improve with
investors continuing to look for trading opportunities mainly in the
plantations sector. Furthermore release of corporate earnings for the
quarter ended March 2008 are due in the coming weeks, thus we advise
investors to monitor these corporate earnings reports and accumulate
stocks that have shown healthy financial performance.
"This information has been compiled from sources that we believe to
be reliable but we do not hold ourselves responsible for itscompleteness
or accuracy. No matter published herein create any liability of any kind
of HNB Stockbrokers (Private) Limited or its associates. All opinions,
views, findings and conclusions included in this report constitute our
judgment of this date and are subject to change without notice.
The future of baking industry
As we are all aware, the global economic environment is changing
rapidly and the consumer eating habits are subject to change at a faster
rate creating many challenges for personnel in the food industry.
The food raw material shortages and escalating prices, the increasing
cost of power and energy and cost of production, administration and
distribution will greatly influence the determination of the final
finished product pricing. Will the finished product pricing be
affordable and acceptable to the consumer? Well this is yet to be seen
and identified in the future since income levels of consumers have not
increased proportionately in relation to cost of living.
As far as the Baking industry (bakery and biscuit industry) in
Srilanka it is time for a major change to re-invent the industry and
prepare their human resource asset base to face the challenges in the
The sharp price increases of wheat flour, bakery ingredients, cost of
power and energy and fuel and L.P .Gas will take place due to external
factors which the industry will not be able to control. The effect on
these factors will have a major impact on the final pricing of the
New product innovation based on changing eating habits of consumers,
developing cost effective recipes while maintaining quality of the
finished product, reduction in overhead cost (production, administration
and marketing cost ) will be some of the key factors the personnel in
the baking industry will have to carry out in a systematic manner and
face the challenges.
Manufacturing of baked products at cost effective rates and priced at
an affordable rates to consumers will be the key factor to be in
Wheat flour is the key base ingredient in the baking industry. Sri
Lanka is a country where wheat is not grown and the country's entire
requirement is imported from wheat marketing nations.
Due to the drop in production of wheat internationally and the
product also being channeled for the preparation of Bio fuels the future
pricing of this product will be very uncertain and increasing prices
will be forecasted.
The government of Sri Lanka is also discouraging the consumption of
wheat based products in order to promote rice based products and
increase rice production locally in order to save the massive amount of
foreign exchange that is used up for importing wheat grain and wheat
flour. As a result the baking industry will not receive any subsidy from
the government of Sri Lanka in order to keep the prices of wheat flour
at a lower level.
The other key bakery ingredients too have increased and will increase
further in the future. Fats and margarines, bakers yeast, vegetable
oils, sugar, skimmed milk, flavors and coloring, dried fruits, are some
of the other ingredients which are imported to the country or produced
in Sri Lanka with imported raw material (palm oil, palm olein, palm
stearine) which cost the country a large amount of foreign exchange.
The prices of locally purchased ingredients like salt, spices, fish
and meats, vegetables have increased over a period of time and if
cultivation processes are not managed efficiently and productivity not
increased the prices of these items too will also increase in the
With these major changes taking place will the baking industry
survive and continue to manufacture traditional baked products at