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Dimantha Mathew, Head of Research at First Capital commenting on the Bond and Equity market forecast – 26.05.2019

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Dimantha Mathew, Head of Research at First Capital commenting on the bond and equity market forecast – 26.05.2019

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.

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.

Weekly Govt Securities Market Positive liquidity sets 1-Year bill to hit nearly 16-month low

CEYLON TODAY | 24.05.2019

Treasury Bills and Bonds Sri Lanka

By First Capital Research

Weekly yield movement and volume

The secondary market yield curve continued its downtrend on the back of heavy buying interest, primarily centred on the short to mid tenor maturities. Shorter end of the curve witnessed a decline in the range of 0-40bps while the belly-end witnessed a steep decline in the range of 45-59bps. Long tenors saw a dip in yields by nearly 30bps. The total secondary market turnover for the week from 16 May to 22 May amounted to Rs 54.4 billion. At the primary bill auction held on 22 May, the one-year bill yield was seen plunging below 9 per cent to reach 8.90 per cent levels after nearly 16 months with a steep drop of 28 basis points, followed by the six-month bill dipping by 17 basis points to 8.71 per cent. However, all bids received on the three-month bill were rejected with the total offered amount of Rs 20.0 billion being fully accepted.
Meanwhile, at the SLDB auction, out of the total offered amount of US$ 200 million, US$ 165.5 million was accepted with maturities ranging from one-year and eight-months to three-year and 11-months. In the forex market, the rupee appreciated slightly on 17 May to Rs 175.85 relative to Rs 176.04 on 16 May; thereafter, it slightly depreciated to close the week at Rs 176.59.


Liquidity and CBSL Holdings

Market liquidity remained positive throughout the week to close the week at Rs 19.75 billion, while CBSL continued to drain out liquidity by way of repo auctions during the week. CBSL holdings slightly declined to Rs 158.54 relative to Rs 160.28 held at the beginning of the week.


Foreign Interest

Foreign holding further decreased by Rs 433.1 million to record at Rs 143.3 billion. Foreign holding percentage dipped to 2.6 per cent from previous 2.7 per cent.


Maturities for next Week

The Government security market has a Treasury bill maturity amounting to Rs 14.4 billion and a coupon of Rs 23.1 billion that needs to be settled during the week ending 31 May 2019.


Daily Summary

Thursday (16.05.19): Buying interest witnessed in the secondary market led to a slight downward shift in the overall yield curve. while the market witnessed moderate volumes. Foreign buying centred on [15.03.24] at 10.41 per cent and on [01.09.28] at 10.71 per cent, while activity was witnessed on two mid tenure 2023 maturities ([15.03.23] and [15.07.23]) at intraday lows of 10.30 per cent and 10.32 per cent, while two 2027 maturities ([15.01.27] and [15.06.27]) traded at 10.68 per cent and 10.76 per cent respectively. Foreign selling was witnessed on short tenure [01.10.22] at 10.15 per cent.
Friday (17.05.19): The secondary market yield curve witnessed a slight downward shift fuelled by the continued buying interest, while the overall market witnessed high volumes. In the midst of buying interest, following maturities’ yields were seen decreasing to their intra-day lows, with short tenor [01.03.21] at 9.57 per cent, [01.05.21] at 9.65 per cent, [01.08.21] at 9.60 per cent and [15.12.21] at 9.68 per cent. Mid tenors [15.03.22], [15.03.23] and [15.07.23] changed hands at intra-day lows of 9.88 per cent, 10.25 per cent and 10.23 per cent, while both foreign and local buying were centered on [15.03.24] maturity, which traded at day’s low of 10.27 per cent. Moreover, [01.08.24] was seen trading at intraday low of 10.31 per cent, while both [01.08.26] and [15.01.27] traded at 10.60 per cent. In the long end of the curve, [01.05.29] traded at 10.80 per cent. In the money market, overnight surplus liquidity in the system stood at Rs 38.2 billion, while CBSL continued to absorb excess liquidity of another Rs 57.8 billion by way of term repo auctions.
Tuesday (21.05.19): The secondary market saw aggressive buying interest in the morning session, following the CBSL Governor’s indication of a likely monetary loosening at the next policy meeting. Short-tenure maturities reached intraday low on the back of buying interest with [15.03.22] trading at 9.90 per cent, [15.05.23] at 10.10 per cent, [15.03.24] at 10.05 per cent, [01.08.26] at 10.30 per cent and [15.01.27] at 10.36 per cent.

Ahead of primary bill auction, the one-year traded at 9.03 per cent, while the overall yield curve continued to shift down amidst buying interest, while the overall market witnessed moderate volumes. Profit taking was witnessed on [15.03.24] and [15.01.27] at 10.15 per cent and 10.50 per cent respectively. CBSL has offered Rs 20 billion consisting of all three maturities at auction.

 

 

 

 

 

Atchuthan Srirangan, Assistant Manager – Research, at First Capital on the Bond and equity Market performance – 23.05.2019

Treasury Bills and Bonds in Sri Lanka

Atchuthan Srirangan, Assistant Manager – Research, at First Capital on the bond and equity market performance – 23.05.2019

First Capital is an investment bank providing a full range of financial advisory and services. The Company’s research delivers a 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 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 on the bond and equity market performance – 22.05.2019

Treasury Bills and Bonds in Sri Lanka

Dimantha Mathew, Head of Research, at First Capital on the bond and equity market performance – 22.05.2019

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.

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.

Hiruni Perera, Senior Research Analyst, at First Capital on the bond and equity market performance – 21.05.2019

Treasury Bills and Bonds in Sri Lanka

Hiruni Perera, Senior Research Analyst, at First Capital on the bond and equity market performance – 21.05.2019

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.

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 on the bond and equity market performance – 16.05.2019

Treasury Bills and Bonds in Sri Lanka

Dimantha Mathew, Head of Research, at First Capital on the bond and equity market performance – 16.05.2019

First Capital is an investment bank providing a full range of financial advisory and services. The Company’s research delivers a 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 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 on the bond and equity market performance – 15.05.2019

Treasury Bills and Bonds in Sri Lanka

Dimantha Mathew, Head of Research, at First Capital on the bond and equity market performance – 15.05.2019

First Capital is an investment bank providing a full range of financial advisory and services. The Company’s research delivers a 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 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 on the bond and equity market performance – 14.05.2019

Treasury Bills and Bonds in Sri Lanka

Dimantha Mathew, Head of Research, at First Capital on the bond and equity market performance – 14.05.2019

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.

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.

Foreign buying high; swimming against the tide

SUNDAY TIMES | 19.05.2019

It was a case of ‘the time to buy is when there is blood on the streets’ for foreign investors at the Colombo share market for the past month.

The worse things seem in the market, the better the opportunities are for profit for foreigners, when analysing their buying behaviour since the Easter terror attacks till mid last week, analysts say.

They say that foreign funds believe in ‘bad times make for good buys’. “This is swimming against the current of common opinion and coming out on top,” an analyst opined. Some foreign funds are asking for certain stock quantities that stockbrokers cannot offer, he said noting that they act on ‘when everyone else is selling, it’s a great time to purchase.’

The Easter Sunday terror attacks haven’t perturbed the foreign buyers so much so, that they are placing orders for stock quantities that the brokers can’t find,” another stock market analyst added. In the aftermath of the attacks, foreigners have been on a buying spree. By last Tuesday net foreign buying was at Rs. 1.8 billion. Wednesday saw a bit of selling, but analysts said that buying will rebound by this week.

“Except for Sri Lanka, foreigners have experienced attacks such as these in most of South Asia. Most emerging foreign funds are used to this. Now they only rely on the valuations,” Dimantha Mathew, Head of Research at First Capital told the Business Times. The Colombo Stock Exchange (CSE) has been trading at 8 to 9 times earnings in the recent past. “Terror attacks have happened elsewhere in the region. Now most foreigners are immune to this kind of situation. We saw that foreigners increased their exposure immediately after the attacks and grabbed the opportunity,” Mr. Matthews noted.

Other analysts agreed. They said that the silver lining in the whole sad situation is that most western investors understand the enemy because they have lived with the same threat. “So even now they’re looking for bargains,” an analyst said.

Tundra Sustainable Frontier Fund in its April update said that “this type of event should be seen as uncommon in Sri Lanka as it was in Paris, Marseille or Stockholm. There is no traditional breeding ground for religiously motivated terrorism in the country. The civil war that ended in 2009 had a completely different background.” The statement added that the recruitment base for terrorists tends to be found among the most vulnerable groups of a population with limited educational background, whereas several of the attackers in this case were well-educated, some educated abroad. “Sri Lanka is often used as an example of a country with great tolerance for different religions and although confrontations have arisen between mainly Buddhists and Muslims, one must conclude that the shock from the events is as significant as when it occurred in Sweden,” it said.

Mr. Matthews said that the macro economy is improving with liquidity increasing in the market etc. “With liquidity increasing, interest rates will be lower. We also see inflows coming in. These are aid to rebuild, worker remittances to build what was destroyed in their families, etc which will help the increase in money supply.”

However, the paradox is that locals sold because they thought that foreigners will do so too. “Local investors got it wrong,” the analyst said.

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.

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.

 

Weekly Govt Securities Market Steep decline of 1-Yr T-bill to 9.18%

CEYLON TODAY | 17.05.2019

Treasury Bills and Bonds in Sri Lanka

By First Capital Research

Weekly Yield movement & Volume

The secondary market yield curve was seen once again recording a parallel shift downwards, on the back of heavy buying interest primarily centred on the short to mid tenor maturities. The shorter end of the curve witnessed a steep decline in the range of 7-15bps, while the benchmark 364-day bill was seen trading at an intraday low of 9.15 per cent. In the belly-end of the curve, maturities were seen dropping by 2-15bps, while the long tenors witnessed a dip in yields by 3bps.
At the primary bill auction held on 15 May, the three-month and six-month were accepted at a weighted average of 8.52 per cent and 8.88 per cent, respectively, while the benchmark one-year witnessed a steep dip by 26bps to record at 9.18 per cent following its previous week’s dip of 37bps. Post auction, on the back of buying interest one-year bill dipped further to close the day at 9.10 per cent.
Meanwhile, in the forex market, the rupee depreciated mid-week to Rs 176.74 from opening levels of Rs 174.90/10, thereafter, the rupee slightly appreciated to close the week at Rs 176.17.


Liquidity and CBSL Holdings

Market liquidity remained positive throughout the week to close the week at Rs 25.05 billion on the back of release of long-delayed payments by the Government. CBSL continued to drain out liquidity by way of repo auctions throughout the week at weighted averages ranging between 8.38 per cent and 8.59 per cent.


Foreign Interest

Foreign holding decreased by Rs 10.8 billion to record at Rs 143.7 billion. Foreign holding percentage dipped to 2.7 per cent from a previous level of 2.9 per cent.


Maturities for next Week

The Government Security Market has a Treasury bill maturity amounting to Rs 16.1 billion that needs to be settled week ending 24 May 2019.


Daily Summary

Thursday (09.05.19): In the secondary market, shorter end of the yield curve witnessed a steep downward shift with heavy demand, while the overall market witnessed moderate volumes. The one-year bill also recorded a notable dip to close at 9.15 per cent. During the morning hours of trading there was a slight increase in yields mainly centred on [15.03.24] maturity which traded at 10.62 per cent in the midst of profit taking. However, towards the latter part of the day, with buying interest it was seen trading at intra day’s low of 10.52 per cent. Furthermore, following maturities traded at their intra-day lows as [01.07.19] traded at 8.60 per cent, [15.12.20] at 9.60 per cent, [15.03.22] at 10.00 per cent, [15.07.23] at 10.40 per cent and [01.09.23] at 10.42 per cent. In the long end of the curve, [01.05.29] changed hands at 10.95 per cent.

 
Friday (10.05.19): Continuing positive sentiment drives secondary market yield curve downwards across the board reinforced with net surplus liquidity in the system including term repo, recording a high of Rs 89.24 billion. Buying interest was witnessed on the following maturities trading at intraday lows with the one-year trading at 9.15 per cent with considerable volumes, while [01.05.20] traded at 9.13 per cent. Foreign buying was seen on the 2021 maturities with [01.08.21] trading at intraday lows of 9.75 per cent and [15.10.21] at 9.80 per cent. Local buying interest was seen on [15.03.22], [15.03.23], [15.07.23], [15.03.24] trading at day’s low of 9.95 per cent, 10.25 per cent, 10.30 per cent, 10.40 per cent, respectively. In addition, [15.01.27] traded at 10.72 per cent with considerable volumes, as [15.06.27] traded at 10.80 per cent, while overall market witnessed high volumes.

 
Monday (13.05.19): The secondary market yield curve remained mostly unchanged with mixed activities, while the overall market witnessed high volumes for the day. In the short end of the curve, [15.12.20] traded in the range of 9.75 per cent-9.85 per cent levels, [15.03.22] at 9.90 per cent and [15.03.23] at 10.30 per cent. Mid tenor [15.03.24] witnessed high volumes trading at 10.40-10.47 per cent levels, while on the back of foreign buying, [01.08.24] traded at 10.46 per cent. Furthermore, in the midst of buying interest, the following maturities were seen trading at their intra-day lows: [01.06.26] at 10.67 per cent, [01.08.26] at 10.65 per cent, [15.06.27] at 10.75 per cent. In the long end of the curve, [01.05.29] changed hands at 10.86 per cent.

 
Tuesday (14.05.19): With the prevailing tensed situation mixed activity was witnessed in the secondary market with a slight upward shift in the yield curve amidst high volumes. Selling pressure was witnessed during the early hours of trading on the following maturities trading at their intraday high with [01.03.21], [01.05.21], [01.08.21] and [15.12.21] trading at 9.85 per cent, 9.88 per cent, 9.92 per cent and 10.00 per cent, while [01.05.21], [01.08.21] and [15.12.21] traded at 9.85 per cent, 9.88 per cent, 9.92 per cent and 10.00 per cent, and [15.03.23] and [15.07.23] traded at day’s high of 10.50 per cent and 10.48 per cent, respectively, In addition, [15.01.27], [15.06.27], [01.05.29] all traded at 10.80 per cent, while [01.05.29] traded at 10.92 per cent. During the latter session of trading, foreign buying was seen primarily centred on [15.03.24] at 10.50 per cent, while the one-year T-bill traded at day’s high of 9.25 per cent.

 
Wednesday (15.05.19): Selected mid to long tenure maturities were seen reaching intraday low amidst the buying interest, with [15.03.23] reaching 10.35 per cent, foreign buying led [15.03.24] to the day’s lowest of 10.41 per cent and [15.01.27] traded at 10.73 per cent, while the overall yield curve shifted slightly downwards, with overall market witnessing moderate volumes. At the primary bill auction, yield of three-month crawled to 8.52 per cent, six-month yield dipped to 8.88 per cent and one-year yield dipped to 9.18 per cent, recording a near eight-month low since September 2018. Post auction, on the back of buying interest, the one-year bill dipped further to close the day at 9.10 per cent, while three short term 2021 maturities ([01.03.21], [01.08.21] and [15.10.21]) traded at 9.65 per cent, 9.75 per cent and 9.85 per cent, respectively.