Acuity Stockbrokers weekly market review

Trading at the bourse ended on a negative note with both indices slipping marginally. The ASPI closed at 5460.19 points, down 1.91% (106.11 points) and the MPI closed at 4745.19 points, down 1.20% (57.59 points).

Weekly aggregate turnover value was once again dominated by Aitken Spence Plc, LB Finance Plc and Hayleys Plc which contributed 66.77% cumulatively to market turnover volume.

The daily average turnover value for the week rose 30.29% to Rs.2.23 billion relative to Rs. 1.71 billion recorded last week. Market Capitalization however, declined week-on-week to close at LKR 2001.99bn, down 1.90% from last week’s total of Rs. 2040.84 billion.

The Diversified sector generated the highest turnover value with a contribution of 62.13% or Rs 6.93 b over the week. The Banking and Finance sector followed suit, accounting for 13.23% of market turnover value amounting to Rs 1.48 b while the Motors sector contributed Rs. 892.64 m or 8.00%.

The Diversified sector also contributed to the largest transaction of shares over the week as 60.79 million (or 39.64%) shares changed hands. The Banking and Finance sector meanwhile accounted for 17.38% (or 26.65mn shares) of share transactions over the week while 16.81mn shares (or 10.96%) changed hands in the Manufacturing sector.

AMF Company Ltd. recorded the highest price gain over the week, closing at Rs 425.00, up 41.67% from last week’s close Rs 300.00. J.L. Morison Sons and Jones Plc [NV] gained 30.26% to close at Rs 149.80 while Bimputh Lanka Investments Plc closed at Rs 38.80 recording a week-on-week gain of 29.33%.

Selinsing Plc topped the price losers list for the week, declining 26.14% to close at Rs 1107.90 from last week’s close of Rs 1500.00. Keells Food Products Plc declined 25.45% during the week to close at Rs 99.90 while Dolphin Hotels Plc closed 23.20% down at Rs. 29.80.

Aitken Spence Plc led the volume list this week, accounting for 30.34% or 46.53mn shares of the week’s aggregate share volume. PC House contributed 7.23% (or 11.09 m shares) to the market’s total share volume.

Foreign investors ended the week as net sellers with total foreign sales increasing significantly to Rs1. 47 b from Rs 162.44 m last week. Net sales amounted to Rs 620.70 m as against last week’s net buying position Rs 1.18 b, averaging a net sales position of Rs 124.14 m a day.

In terms of volume, Aitken Spence Hotel Holdings and Commercial Bank recorded the highest foreign purchases over the week, while Sathosa Motors and PC House recorded the highest foreign sale.

Point of View

Markets lost steam over the week as macro-conditions and a lack of investor confidence in the new trading system dampened sentiment. Transaction volumes peaked mid-week amid two large corporate deals – namely, the sale of SLIC’s 11% stake in Aitken Spence to a Distilleries subsidiary and Access Engineering’s acquisition of a 59.7% stake in Sathosa Motors – but overall market participation was low as investors struggled to adopt the trading system which has not been user-friendly. Given this and the shortened trading week ahead, we expect markets to remain subdued.

Q4 Corporate earnings have been moderately strong thus far, with sectors such as Banks and Financials, Hotels andTravels, Manufacturing, Motors and Health Services recording Y-o-Y growth. Official inflation figures for February meanwhile indicate a further moderation (2.7% Y-o-Y from 3.8% in January).

The Central Bank also cited recent downgrade of the Rs as unwarranted stating that the government and Central Bank have taken necessary measures to strengthen the country’s performance on the fiscal, monetary and external fronts.