Foreign inflows to stock market soar to Rs. 18 b

Thursday, 18 May 2017

Net foreign inflows to the Colombo stock market swelled to Rs. 18 billion by yesterday, reaffirming growing investor confidence from overseas unlike their Lankan counterparts.

Year to date net inflow was boosted by a Rs. 903 million contribution yesterday. So far in May, net inflows have been Rs. 1.5 billion.

The year to date figure of Rs. 18 billion is very significant given the fact that last year net inflows amounted to only Rs. 400 million. In 2015 there was an outflow of Rs. 5.3 billion.

Year to date, the All Share Index has improved by nearly 8% while the more active S&P SL 20 Index moved up to offer a double-digit return of 10.51%. Since 31 March, the ASI has risen by 11%.

Reuters in its report said the CSE ended at its highest level in over a year as foreign investors continued to buy blue chips after an annual trade concession worth $ 300 million from the European Union (EU) added fuel to a rally that started towards the end of March.

Index heavyweight John Keells Holdings Plc ended almost 1% higher on foreign buying. JKH saw 5.6 million of its shares traded for Rs. 939 million of which five million shares were done at Rs. 168 each via three crossings. JKH’s foreign holdings increased by 4.9 million shares.

Deals on JKH, Dialog Axiata, Nestle Lanka and Chevron Lubricants accounted for 60.3% of the day’s turnover.

The Colombo stock index ended 0.39% firmer at 6,718.34, its highest close since 8 January 2016.

Turnover stood at Rs. 1.75 billion ($ 11.48 million), well above this year’s daily average of Rs. 899.5 million.

“Foreign interest is continuing in blue chips,” Atchuthan Srirangan, a senior research analyst at First Capital Holdings Plc, was quoted as saying by Reuters.

Reduction of 11-38 basis points in T-bill yields in the last four weeks, stable currency on the expectation of inflows from foreign borrowing and an IMF statement on the disbursement of the third tranche of a $ 1.5 billion loan have helped boost sentiment, analysts said.

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.<