Investment in Sri Lanka

Sri Lankan shares hit one-week closing high on foreign buying

FIRST CAPITAL’S HEAD OF RESEARCH DIMANTHA MATHEW SPEAKS TO REUTERS

Fri Jul 7, 2017

Sri Lankan stocks on Friday ended at their highest in a week, underpinned by manufacturing and diversified shares while offshore investors continued to be net buyers.

Local investors, however, cautiously acquired shares amid concerns over a proposed tax bill.

Foreign investors net bought 179.9 million rupees ($1.17 million) worth of shares on Friday, extending their year-to-date net inflows to 22.7 billion rupees worth of equities.

The Colombo stock index ended 0.34 percent higher at 6,737.50, its highest close since June 30. The bourse lost 0.14 percent for the week.

“There were a lot of retail activities, and with that the mid-cap counters got activated other than the blue chips,” said Dimantha Mathew, head of research, First Capital Holdings PLC.

“Foreign segment remained active and it added on to the turnover.”

Analysts said new foreign investors are buying Sri Lankan shares since the Pakistan bourse was upgraded to emerging market from frontier market.

In May, index provider MSCI announced changes to its indexes as a result of its semi-annual market reclassification, including reclassifying Pakistan as an emerging market from frontier market status, and the addition of 57 securities and removal of 28 securities from its All-Country World Index .

The day’s turnover was 937.4 million rupees, more than this year’s daily average of 919.4 million rupees.

Brokers said local investors have been waiting for some clarity on the proposed inland revenue legislation, which some companies expect will result in higher cost of production.

The IMF, which has long urged Sri Lanka to boost tax revenue through modernisation and simplification of its fiscal system, has urged the government to submit to parliament a new Inland Revenue Act.

Shares of Richard Pieris Plc ended 9.6 percent higher, while conglomerate John Keells Holdings Plc closed 0.6 percent higher.

($1 = 153.5500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)

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.<