Bartleet weekly market summary:

Stocks tumble, heavy trading of Ceylinco Group counters

Sri Lankan stocks went further into red last week after having experienced marginal negative sentiments last week.

The ASPI tracker went below the support level of 1700 on Thursday while the more liquid indicator i.e. the MPI dipped below the 1800 levels on Wednesday.

Turnover saw a notable boost on Thursday on the backdrop of three block deals being struck during the day’s trading session. High foreign selling pressure was also visible on the said day with a notable outflow being recorded.

Nevertheless, on average, activity remains modest in terms of the volumes being traded at the bourse.

On overall terms the ASPI edged down by 2.3% WoW to 1693.9 while the more liquid MPI crouched by 3.8% WoW to settle at 1774.

In the former part of the week, heavy trading was witnessed by the Ceylinco family and related counters namely Seylan Bank PLC - non voting SEYB(X), Ceylinco Insurance PLC (CINS) and Seylan Merchant Bank PLC (SEMB). This was fuelled by the prospect of a new buyer coming into SEYB with a further injection of capital serving to provide more stability to the bank’s operations whilst assuring the customers of the security of their deposits.

However, towards the latter part of the week the “Ceylinco spell” was broken and other counters took over dominant positions in the market. CINS counter dipped by Rs.3.00 to Rs.163.00 on Friday having witnessed two block deals with regard to a collective pack of 1.42Mn shares been transacted at Rs.166.00. Counters CINS and SEYB depreciated by 6.8% and 8.8% WoW respectively. SEYB(X) was the top volume contributor with 3.67Mn shares (17.07%) while CINS dominated the turnover list with Rs.101.92Mn (36.3%).

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Union Assurance PLC (UAL) was one of those counters which became prominent towards the end of the week. The stock saw a crossing on Thursday when a parcel of 1.30Mn shares changed hands at Rs.72.00. Last Friday, extensively diversified JKH bought over a total of 13.86Mn shares of UAL from the sellers Ceylon Guardian Investment Trust PLC, Ceylon Investment PLC and Carson Cumberbatch & CompanyPLC (CARS), once again enforcing the stability of the local financial sector when compared with the global scenario.

After the big deal last week, John Keells Holdings PLC (JKH) has further purchased 1.4Mn shares of UAL in the trading floor as at 26th February 2009. The UAL counter made a contribution of Rs.101.92Mn (13.5%) to the weeks’ turnover.

There was considerable interest on Lanka Cement PLC (LCEM) throughout the week with a volume of 1.15Mn shares (5.35%) changing hands this week.

This is most probably attributable to the fact that four foreign investors are said to be eying the defunct cement plant in Jaffna with the battle against the LTTE closing in by the day and the upcoming rebuilding and restructuring process been anticipated. Heavyweight Dialog Telekom PLC (DIAL) fluctuated between Rs.4.70 and Rs.5.00 during this week after having released the year end financial statements recently.

The telecom operator dived into losses due to enhanced price reduction campaigns and long term investment exercises. DIAL Company recorded a loss of Rs.388Mn. which was further eroded by subsidiary losses to a notable loss of Rs.2.88Bn, depicting a decline of 132% YoY. The counter closed down by Rs.0.10 to Rs.4.80 straight after the results were made known.

The stock saw a total of 1.43Mn shares (6.65%) been traded last week. Conglomerate JKH which is a hot foreign attraction drew considerable interest last week with 2.14Mn shares (9.95%) and a turnover of Rs.130.07Mn (17.25%) respectively coming in second in both lists.

The stock recorded a large scale deal on Thursday with 0.50Mn shares been traded at Rs.60.00. On Wednesday, the counter experienced a notable drop in value of Rs.3.75 to Rs.61.00, most probably on fears of high net worth foreigners exiting from ownership of the company.

Commercial Bank PLC (COMB) saw a pack of 0.30Mn shares been transacted on the same day at Rs.85.75. The banking sector stock witnessed a total turnover of Rs.28.88Mn (3.8%). 0.14Mn Sampath Bank PLC (SAMP) shares changed hands at Rs.70.00 in a large scale deal that took place on Friday.

Investors will be presented with four new Initial Public Offers (IPO’s) in the near future. Two manufacturing sector firms, one power generating company and another company in the textile business namely South Asian Textile Mills Ltd, are said to have already submitted applications for listing their shares on the CSE. South Asian Textile Mills Ltd whose manufacturing plant is located in Pugoda, will list 25% of their equity within the next two months.

This can be viewed as a much needed energizer to the currently dull market proving ample opportunity to widen the margins. Nevertheless, investors are urged to make decisions after a thorough evaluation of the fundamentals of the companies taking a long term view. These new listings will up the number of listed companies in the bourse to 239.

Mere net foreign inflows were seen in the first few days before a heavy outflow of Rs.49Mn was registered on Thursday. This triggered a net outflow of Rs.52.5Mn for last week.