ASPI hits six-year low as market slump continues | Daily News

ASPI hits six-year low as market slump continues

 The Bourse ended the week on a negative note as the ASPI decreased by 76.19 (or -1.36%) to close at 5,540.05 points, while the S&P SL20 Index also decreased by 36.16 points (or -1.31%) to close at 2,724.94 points.

Turnover & Market Capitalization

HNB was the highest contributor to the week’s turnover value, contributing LKR 0.62Bn or 32.29% of total turnover value. Hemas Holdings followed suit, accounting for 12.29% of turnover (value of LKR 0.23Bn) while Ceylon Tobacco contributed LKR 0.18Bn to account for 9.39% of the week’s turnover. Total turnover value amounted to LKR 1.91Bn (cf. last week’s value of LKR 3.43Bn), while daily average turnover value amounted to LKR 0.48Bn (-30.46% W-o-W) compared to last week’s average of LKR 0.69Bn. Market capitalization meanwhile, decreased by 1.33% W-o-W (or LKR -34.86Bn) to LKR 2,590.23Bn cf. LKR 2,625.08Bn last week.

Liquidity (in Value Terms)

The Banks, Finance & Insurance sector was the highest contributor to the week’s total turnover value, accounting for 50.01% (or LKR 0.96Bn) of market turnover. Sector turnover was driven primarily by HNB, Commercial Bank, Sampath Bank, & Union Bank which accounted for 83.49% of the sector’s total turnover. The Diversified sector meanwhile accounted for 21.24% (or LKR 0.41Bn) of the total turnover value, with turnover driven primarily by Hemas Holdings & JKH which accounted for 34.33% of the sector turnover. The Beverage, Food & Tobacco sector was also amongst the top sectorial contributors, contributing 14.61%(or LKR 0.28) of the total turnover, where sector turnover was primarily driven by Ceylon Tobacco & Nestle Lanka which accounted for 84.85% of the sector turnover.

Liquidity (in Volume Terms)

The Services sector dominated the market in terms of share volume, accounting for 26.29% (or 15.53Mn shares) of total volume, with a value contribution of LKR 0.05Bn. The Banks, Finance & Insurance sector followed suit, adding 26.06% to total turnover volume as 15.40Mn shares were exchanged. The sector’s volume accounted for LKR 0.96Bn of total market turnover value. The Power & Energy sector meanwhile, contributed 11.62Mn shares (or 19.67%), amounting to LKR 0.07Bn.

Top Gainers & Losers

Tess Agro was the week’s highest price gainer; increasing 33.3% W-o-W from LKR0.30 to LKR0.40 while Abans Financials (+17.0% W-o-W), Renuka Hotels (+12.3% W-o-W) and Renuka Foods (+9.7% W-o-W) were also amongst the top gainers. Resus Energy were the week’s highest price loser; declining 33.6% W-o-W to close at LKR18.6 while HVA Foods (-21.9% W-o-W), Lankem Ceylon (-18.3% W-o-W) and Softlogic Life (-16.9% W-o-W) were also amongst the top losers over the week.

Point of View

The benchmark index fell to a 6-year low (since Dec’2012), registering a weekly loss of 76.2 points (or –1.4% W-o-W) as concerns over weak Q4’2018 GDP weighed down sentiment. Declines on the index this week, dragged the YTD loss on the ASPI to 8.5% (from 7.2% last week) on the back of domestic and broader global uncertainty despite the US Fed’s decision to abandon further rate hikes this year. Activity levels on the Colombo Bourse meanwhile remained mostly dull during the holiday shortened week which led to a further decline in average daily turnover for the week despite a burst of investor activity in HNB on Thursday.

Average daily turnover for the week fell 30.5% W-o-W to Rs. 0.48Bn cf. Rs. 0.69Bn last week due to weaker local institutional and HNI investor participation. Crossings for the week consequently accounted for ~19% of total turnover (cf. an average weekly contribution of 43% this year) with index heavy-weight, CTC accounting for 41% of the week’s total crossings while buying interest in Vallibel Power, Nestle, JKH, Renuka Capital and NDB also contributed to total crossings for the week.

Foreign investors on the Colombo Bourse meanwhile returned to a net sell-off position on domestic risky assets, recording a net outflow of Rs. 80.5 Mn cf. a net inflow of Rs. 44.6Mn last week.

The majority of foreign selling was in blue-chip Hemas Holdings throughout the week but foreign buying in CTC helped pare down the net sell-off in the market. The YTD net foreign outflow from the Colombo bourse has consequently amounted to Rs. 6.0Bn (relative to a net outflow of Rs. 2.6Bn recorded between Jan’18 – Mar’18). Markets in the week ahead are likely to take cues from further economic developments ahead of the final vote on the 2019 Budget.

GDP Growth falls to 17-year low of 3.2%

Sri Lanka’s GDP grew at its weakest pace in 17 years, as growth fell to 3.2% Y-o-Y amid a sharper slowdown of in Q4’18 (+1.8% Y-o-Y) relative to Q4’17 (+3.7% Y-o-Y). Growth in the 4th quarter fell to a 4-year low (since Q4’13 of 0.5% Y-o-Y) as sluggish Industrial activity (-3.6% Y-o-Y cf. +4.3% Y-o-Y in Q4’17) amid the Q4’18 political crisis contributed to the overall weaker annual growth. Lackluster Industrial activity during the year was however offset by the recovery of Agriculture and Services sectors relative to 2017.

Growth in Industrial activity slowed to a mere 0.9% Y-o-Y in 2018 cf. 4.1% Y-o-Y in 2017 as the sector’s largest contributor, Construction, contracted by 2.1% Y-o-Y (cf. growth of 4.3% Y-o-Y in 2017). Improvements in Food, Beverage & Tobacco (5.5% Y-o-Y cf. -0.9% Y-o-Y in 2017) industry failed to offset the slower growth in the overall sector as the Textile industry also grew at a slower pace (3.6% Y-o-Y cf. 3.8% Y-o-Y in 2017).

The Services sector which is the largest contributor to GDP (57.7% in 2018), meanwhile recorded a higher growth (4.7% Y-o-Y in 2018 cf. 3.6% in 2017), supported by growth in Wholesale & Retail Trade (5.0% Y-o-Y vs. 3.8% Y-o-Y in 2017), and Financial Services (11.8% Y-o-Y cf. 9.4% Y-o-Y in 2017). However growth in service-orientated sub-sectors such as Transportation (2.8% Y-o-Y cf. 3.2% Y-o-Y in 2017) and Real Estate (3.8% Y-o-Y cf. 4.7% Y-o-Y in 2017) continued to remain sluggish. Agricultural activity meanwhile recorded positive growth in key sub-segments compared to last year, resulting in a growth of 4.8% Y-o-Y in 2018 cf. to a contraction (-0.4% Y-o-Y) in 2017 due to severe drought conditions. National inflation levels in Feb’19 meanwhile increased to 2.4% Y-o-Y (cf. 1.2% Y-o-Y in Jan’19) while the NCPI Core inflation, which reflects the underlying inflation in the economy, meanwhile increased to 5.5% (cf. 5.1% in Jan’19).

Source ASB Research Weekly Market Review


 

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