Sri Lankan shares hold steady; political woes weigh

DIMANTHA MATHEW, HEAD OF RESEARCH AT FIRST CAPITAL HOLDINGS PLC, SPEAKS TO REUTERS

JANUARY 30, 2018

COLOMBO, Jan 29 (Reuters) – Sri Lankan shares closed little changed on Monday in dull trade as political uncertainty ahead of a local election next month weighed on the sentiment, dealers said.

Sri Lanka will hold a long-delayed local government election on Feb. 10.

President Maithripala Sirisena in an election rally over the weekend said he was ready to form a new government with his Sri Lanka Freedom Party (SLFP), breaking away from the current coalition, in a comment that exacerbated worries about the future of the coalition government.

“The market is stagnated as most of the investors are on wait-and-see approach with election date coming closer,” said Dimantha Mathew, head of research at First Capital Holdings.

“The sluggish trend will continue until the elections are over.”

The Colombo Stock index ended 0.03 percent weaker at 6,453.95, slipping from its highest close since Jan. 12 hit on Friday. The index rose 0.19 percent last week, recording its first weekly gain in three.

Shares in conglomerate John Keells Holdings Plc were down 1.6 percent, while Dialog Axiata Plc lost 0.7 percent, and Sri Lanka Telecom Plc ended 2.5 percent weaker.

Turnover was 337.1 million rupees ($2.19 million), well below last year’s daily average of 915.3 million rupees.

Foreign investors bought a net 404,053 rupees worth of shares on Monday, extending the year-to-date net foreign inflow to 4.02 billion rupees worth of equities. ($1 = 153.7000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

First Capital is an investment bank providing a full range of financial advisory and services. The Company’s research deliver heightened perspective in fundamental research aiding Share Market Investment in Sri Lanka. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis. With fundamental research coverage of 62 listed securities (reflecting approximately 65% market capitalization) across 15 sectors in Share Market Investment in Sri Lanka

Atchuthan Srirangan, Senior Research Analyst at First Capital Holdings, with the Market Review on Ada Derana – 21.01.2018

Treasury Bills and Bonds Sri Lanka

First Capital’s Atchuthan Srirangan with the Market Review on Ada Derana

The comments on this report are provided by the Capital Markets Research Unit of First Capital Holdings PLC an investment bank in Sri Lanka.

The company operates in the capital markets of Sri Lanka in government securities – treasury bills and bonds, stock brokering and share market investments, asset management, private wealth management, retirement planning, personal financial planning, unit trust, margin trading, capital market research, trustee services, corporate finance advisory services including corporate debt structuring (debentures, trust certificates, commercial papers), valuations, restructuring, mergers and acquisitions, initial public offerings (IPOs) and project advisory.

The First Capital Group consists of First Capital Treasuries PLC, First Capital Limited, First Capital Markets Limited, First Capital Asset Management Limited and First Capital Equities (Private) Limited covering Colombo, Negombo, Matara, Kandy and Kurunegala.

First Capital is an investment bank offering services as Stock Brokers in Sri Lanka. The Company acts as a conduit between retail and institutional clients and the secondary market of the Colombo Stock Exchange. First Capital’s best-in-class research team provide a series of actionable trade recommendations, daily and periodic market commentaries and publications for Stock Brokers in Sri Lanka.

Sri Lankan shares hit 2-wk closing high

DIMANTHA MATHEW, HEAD OF RESEARCH AT FIRST CAPITAL HOLDINGS PLC, SPEAKS TO REUTERS

JANUARY 29, 2018

COLOMBO, Jan 26 (Reuters) – Sri Lankan shares rose for a third straight session to hit a two-week closing high on Friday, led by telecom shares, but trading was dull as investors waited for direction amid political concerns over local-government elections next month, dealers said.

The Colombo Stock index ended 0.12 percent firmer at 6,456.04, its highest close since Jan. 12. The index rose 0.19 percent on week, its first weekly gain in three.

Shares in Hemas Holdings Plc were up 0.5 percent, while Dialog Axiata Plc ended 1.5 percent higher, and Sri Lanka Telecom Plc gained 2.5 percent.

“Things were very slow, even the foreign activity was very low today,” said Dimantha Mathew, head of research at First Capital Holdings.

“Activities have been coming down from the last few days. Probably towards elections it will slow down further as investors are on a wait-and-see attitude.”

Turnover was 264.1 million rupees ($1.72 million), its lowest since Jan. 2 and well below last year’s daily average of 915.3 million rupees.

Foreign investors bought a net 21.2 million rupees worth of shares on Friday, extending the year-to-date net foreign inflow to 4.02 billion rupees worth equities.

Sri Lanka will hold a long-delayed local government election on Feb. 10.

President Maithripala Sirisena said over the weekend that he would handle the economy, taking over from the government’s main coalition partner, led by Prime Minister Ranil Wickremesinghe.

The comments have sparked uncertainty over the future of the coalition government, analysts said.

$1 = 153.7000 Sri Lankan rupees Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath

First Capital is an investment bank providing a full range of financial advisory and services. The Company’s research deliver heightened perspective in fundamental research aiding Share Market Investment in Sri Lanka. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis. With fundamental research coverage of 62 listed securities (reflecting approximately 65% market capitalization) across 15 sectors in Share Market Investment in Sri Lanka

Strategy Report 2018 – First Capital Research

Private Wealth Management in Sri Lanka

by First Capital Research

“Tough Conditions, but Cautiously Optimistic 2018”

 Bond Market

We expect the yield curve in Government securities to have upward pressure in 2Q & 3Q in 2018, but First Capital Research has reduced the expected peaks in bond rates (1Yr, 5Yr & 10Yr) amidst the sharp rise in the health of the economic indicators towards 4Q2017. We expect the yield curve to marginally ease off again towards the 4Q2018, but not too much considering 1Q & 2Q 2019 maturities including maturities of 2 sovereign bonds

Banking Rates

Banking rates which has a 6-monthh lag effect to Government securities are likely experience a dip in deposit and lending rates during the 1Q2018 while maintaining less volatile movements for the rest of the year with only marginal movements.

Exchange Rate

With further depreciation in the Dollar expected against global currencies and a higher level of foreign inflows including FDIs, our base case (65%) is slightly bullish with depreciation expected at only 2% at LKR 156 : 1 USD.

Equity Market

We expect Market returns to be slow but generate returns of 10%-12%, above the expected earnings performance as some counters are likely to re-rate with expected better earnings outlook in the future. ASPI index is expected to reach 7000 (+10% or +650 points) towards the end of 2018. Market returns are likely to accelerate towards 2019 to reach 8000 level (+15% or +1000 points) with the actual earnings performance and renewed investor confidence. These targets, however, are highly dependent on the current stable outlook and reform agenda continuing during 2018 as well.

Business Confidence & Consumer Demand

We expect business confidence and consumer demand to improve from 3Q2018 onwards improving overall business activity of the economy

First Capital is an investment bank providing a full range of financial advisory and services. The Company’s research deliver heightened perspective in fundamental research aiding Share Market Investment in Sri Lanka. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis. With fundamental research coverage of 62 listed securities (reflecting approximately 65% market capitalization) across 15 sectors in Share Market Investment in Sri Lanka.

Weekly Government Securities Market – 26-01-2018

The yield curve remained mostly unchanged, while overall market saw thin volumes amidst market participants continuing to adopt a wait-and-see approach, ahead of the bond auction to be held next week. The bill auction saw mixed results, with yield of the 6-month bill dipping by 1bps while the 1-year bill saw its yield increasing by 5bps amidst CBSL accepting lower volumes for 1-year bill. During the week, foreigners continued to dominate market activities.

First Capital Holdings PLC is an investment bank and is the pioneer non-bank affiliated Primary Dealer in Treasury Bills and Bonds in Sri Lanka. With a track record of over 25 years, the Company was the first licensed primary dealer appointed by the Central Bank, and is also the only listed and rated primary dealer in Treasury Bills and Bonds in Sri Lanka.
First Capital delivers the only source for fixed income research in the local financial services industry. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis.

Dimantha Mathew, Head of Research at First Capital Holdings, with the Market Review on Ada Derana – 21.01.2018

Share Market Investment in Sri Lanka

First Capital’s Dimantha Mathew with the Market Review on Ada Derana

The comments on this report are provided by the Capital Markets Research Unit of First Capital Holdings PLC an investment bank in Sri Lanka.

The company operates in the capital markets of Sri Lanka in government securities – treasury bills and bonds, stock brokering and share market investments, asset management, private wealth management, retirement planning, personal financial planning, unit trust, margin trading, capital market research, trustee services, corporate finance advisory services including corporate debt structuring (debentures, trust certificates, commercial papers), valuations, restructuring, mergers and acquisitions, initial public offerings (IPOs) and project advisory.

The First Capital Group consists of First Capital Treasuries PLC, First Capital Limited, First Capital Markets Limited, First Capital Asset Management Limited and First Capital Equities (Private) Limited covering Colombo, Negombo, Matara, Kandy and Kurunegala.

First Capital is an investment bank offering services as Stock Brokers in Sri Lanka. The Company acts as a conduit between retail and institutional clients and the secondary market of the Colombo Stock Exchange. First Capital’s best-in-class research team provide a series of actionable trade recommendations, daily and periodic market commentaries and publications for Stock Brokers in Sri Lanka.

Sri Lankan shares edge lower; turnover up on foreign trades

JALIYA WIJERATNE, CEO AT FIRST CAPITAL EQUITIES SPEAKS TO REUTERS

JANUARY 24, 2018

COLOMBO, Jan 23 (Reuters) – Sri Lankan shares edged down on Tuesday for a second straight session, their ninth session of losses in ten, but turnover was up on heavy trading by foreign investors.

The Colombo Stock index ended 0.05 percent weaker at 6,418.05.

Colombo Cold Stores Plc dropped 3.2 percent, while Ceylinco Insurance Company Plc declined 1.1 percent. Sri Lanka Telecom Plc fell 1.8 percent.

The index has shed around 2 percent in the past ten sessions. It dropped around 0.5 percent last week, the second straight fall on week.

“Foreigners are buying because they are looking at a time horizon of 3-5 years. But local institutional investors are staying away due to political uncertainties,” said Jaliya Wijeratne, CEO at First Capital Equities.

Turnover stood at 1.5 billion rupees ($9.73 million), with foreign trading accounting for around 85 percent of the day’s turnover, which was well above last year’s daily average of 915.3 million rupees.

Foreign investors bought a net 226.1 million rupees worth of shares on Tuesday, extending the year-to-date net foreign inflow to 3.1 billion rupees worth equities.

Foreign investors bought equities worth 18.5 billion rupees last year, and 633.5 million rupees in 2016.

President Maithripala Sirisena said over the weekend that he would handle the economy from this year, taking over from the government’s main coalition partner, led by Prime Minister Ranil Wickremesinghe.

The comments have sparked uncertainty over the future of the coalition government, analysts said.

$1 = 153.8500 Sri Lankan rupees Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath

First Capital is an investment bank providing a full range of financial advisory and services. The Company’s research deliver heightened perspective in fundamental research aiding Share Market Investment in Sri Lanka. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis. With fundamental research coverage of 62 listed securities (reflecting approximately 65% market capitalization) across 15 sectors in Share Market Investment in Sri Lanka.

Sri Lankan shares snap 7-session losing streak

DIMANTHA MATHEW, HEAD OF RESEARCH AT FIRST CAPITAL HOLDINGS PLC, SPEAKS TO REUTERS

JANUARY 24, 2018

COLOMBO, Jan 19 (Reuters) – Sri Lankan shares snapped a seven-session streak of declines on Friday, recovering from a near three-week closing low hit in the previous session, as investors picked up battered blue-chip and banking shares.

However, foreign investors, who have been net buyers of 2.7 billion rupees worth shares so far this year, sold equities worth net 62.1 million rupees ($403,640) on Friday.

They bought equities worth 18.5 billion rupees last year and 633.5 million rupees in 2016.

The Colombo Stock index ended 0.52 percent higher at 6,443.50. In the previous session, it closed at its lowest since Dec. 29.

The bourse shed 2 percent in the past seven sessions and dropped 0.47 percent for the week recording its second straight weekly fall.

“Today we are seeing a lot of foreign activities, but the local investors are buying blue-chip shares,” said Dimantha Mathew, head of research, First Capital Holdings.

“It looks like local, mainly high net worth investors, are eager to buy now,” he added.

Turnover stood at 1.7 billion rupees, nearly twice of last year’s daily average of 915.3 million rupees.

After the market close, diversified company Hemas Holdings Plc said it will take over 75.1 percent of leading stationery manufacturer Atlas Axillia Co (Pvt) Ltd for 5.7 billion rupees.

Shares in conglomerate John Keells Holdings Plc ended 2.5 percent higher, while Hemas Holdings closed 2.5 percent up, and Sri Lanka Telecom Plc ended 2.5 percent higher.

$1 = 153.8500 Sri Lankan rupees Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips

First Capital is an investment bank providing a full range of financial advisory and services. The Company’s research deliver heightened perspective in fundamental research aiding Share Market Investment in Sri Lanka. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis. With fundamental research coverage of 62 listed securities (reflecting approximately 65% market capitalization) across 15 sectors in Share Market Investment in Sri Lanka.

First Capital Research : Top Equity Recommendations 2018

Equity Portfolio Performance 2014-2017

As at 31st Dec 2017 at 2018, First Capital Research Top Recommendations have achieved a Capital Gain of 6.4% (Excluding Dividends) compared to the market performance of 2.3%.

Following are our current and previous top recommendations and their performances for 2014, 2015, 2016 & 2017 for your reference.

 

Top Recommendations for 2018

Brief Equity Outlook

Market earnings: The current tight monetary policy has slowed down the economy significantly reducing earnings growth for most companies. The situation is expected to ease off towards 2H2018. Therefore the companies are likely to have a better earnings performance in 2018E/19E compared to the weak performance we are experiencing in CY17/FY18E. We believe overall market earnings are likely to grow by a modest 5%-7% during 2018E/FY19E supported by a recovery in economic performance in the 2H2018. Earnings Growth is likely to accelerate to 10%-12% towards CY19E/FY20E backed by further improvement in economic health of the country and also easing of the monetary policy with more stability in the system.

Market Returns: Market returns are likely to be slow but positive in the 1H2018 due to attractive valuations prevailing in the economy and is likely to improve in the 2H2018 supported by expectations of a better economic outlook and earnings performance. Thereby, we expect overall market returns are likely to be 10%-12% approximately 50% above the expected earnings performance as some counters are likely to re-rate with an expected better earnings outlook in the future. In terms of the ASPI index it is only likely to reach 7000 (+10% or +650 points) towards end of 2018. Market returns are likely to accelerate towards the 2019 to about 15% with the actual earnings performance and renewed investor confidence. Index is likely reach 8000 level (+15% or +1000 points) towards 2019. These targets however are highly dependent on the current stable outlook and reform agenda continuing during 2018 as well.

Key Sectors: We believe the key sectors that are likely to outperform the market and expected provide high returns are the Banking Sector, Building Materials Sector and Apparel Sector while the energy sector also may turnaround depending on the implementation of the pricing formulas by the Government which is also a condition of the IMF.

 

First Capital is an investment bank offering services as Stock Brokers in Sri Lanka. The Company acts as a conduit between retail and institutional clients and the secondary market of the Colombo Stock Exchange. First Capital’s best-in-class research team provide a series of actionable trade recommendations, daily and periodic market commentaries and publications for Stock Brokers in Sri Lanka.

Sri Lankan shares extend fall on foreign selling

ATCHUTHAN SRIRANGAN, SENIOR RESEARCH ANALYST AT FIRST CAPITAL HOLDINGS PLC, SPEAKS TO REUTERS

JANUARY 19, 2018

COLOMBO, Jan 18 (Reuters) – Sri Lankan shares fell for a seventh straight session on Thursday and closed at their lowest in nearly three weeks, as foreign investors turned net sellers for the first time in 14 sessions while local players stayed on the sidelines.

Foreign investors, who have been net buyers of 2.7 billion rupees worth shares so far this year, sold equities worth net 279.5 million rupees ($1.82 million) on Thursday, especially banks and blue chips.

They net bought 18.5 billion rupees worth equities in 2017 and 633.5 million rupees in 2016.

The Colombo Stock Index ended 0.45 percent weaker at 6,410.11, its lowest close since Dec. 29. It has shed 2 percent in the past seven sessions.

“Market came down on some foreign selling. But turnover was pushed up by foreign trade,” said Atchuthan Srirangan, a senior research analyst with First Capital Holdings PLC.

Turnover stood at 1.3 billion rupees, higher than last year’s daily average of 915.3 million rupees.

Shares in Commercial Bank of Ceylon Plc dropped 2.8 percent, Hemas Holdings Plc declined 4.1 percent, and Ceylon Cold Stores Plc fell 2.1 percent. ($1 = 153.8000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

First Capital is an investment bank providing a full range of financial advisory and services. The Company’s research deliver heightened perspective in fundamental research aiding Share Market Investment in Sri Lanka. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis. With fundamental research coverage of 62 listed securities (reflecting approximately 65% market capitalization) across 15 sectors in Share Market Investment in Sri Lanka.