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Dimantha Mathew, Head of Research at First Capital Holdings, with the Market Review on Ada Derana – 25.02.2018

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.

 

 

Sri Lankan stocks slip to over 1-week closing low on foreign selling

JALIYA WIJERATNE, CEO OF FIRST CAPITAL EQUITIES, SPEAKS TO REUTERS

FEBRUARY 27, 2018 

COLOMBO, Feb 26 (Reuters) – Sri Lankan shares slipped on Monday to a more than one-week closing low, as selling by foreign investors and some concerns about political stability weighed on sentiment, dealers said.

Shares hit a more than three-week high last week after two key parties decided to remain in the ruling coalition, allaying fears of a government collapse.

President Maithripala Sirisena reshuffled his cabinet on Sunday, appointing his prime minister as the law and order minister, after the governing coalition suffered a series of defeats in local elections earlier this month.

“Some block deals boosted the turnover. However, the market is still mixed on political stability. Some investors say the changes are good, while some feel they have failed to ensure stability,” said Jaliya Wijeratne, CEO at First Capital Equities.

The Colombo stock index ended 0.23 percent weaker at 6,560.32, its lowest close since Feb. 15. The index rose 0.18 percent last week.

Turnover stood at 3.3 billion rupees ($21.32 million), the highest since Nov. 8, and more than three times of this year’s daily average of 935.9 million rupees.

Foreign investors sold a net 51.1 million rupees worth of shares, but they have been net buyers of 6.4 billion rupees worth of equities so far this year.

Shares of AIA Insurance Lanka Plc ended 18.9 percent weaker, while Lanka Hospitals Corp Plc fell 5.1 percent. ($1 = 154.8000 Sri Lankan rupees) (Reporting by Shihar Aneez and Ranga Sirilal; Editing by Subhranshu Sahu)

Sri Lankan stocks end steady near 3-month high

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

FEBRUARY 24, 2018 

COLOMBO, Feb 23 (Reuters) – Sri Lankan shares ended steady on Friday, near a more than three-month high hit early in the week, as investors picked up diversified shares.

Investor sentiment got a boost after two key parties decided to remain in the ruling coalition, allaying fears of a government collapse.

The Colombo stock index ended 0.06 percent firmer at 6,575.39, near its highest close since Nov. 6, 2017 hit on Wednesday. The index rose 0.18 percent during the week.

“We are seeing new buying coming into the market with the things settling down on the political front,” said Dimantha Mathew, head of research, First Capital Holdings.

“The profit-taking we saw yesterday did not continue and the buying was more than the selling which is a good sign.”

Turnover stood at 813.6 million rupees ($5.25 million), less than this year’s daily average of 867.9 million rupees.

Foreign investors sold a net 16.9 million rupees worth of shares, but they have been net buyers of 6.4 billion rupees worth of equities so far this year.

Shares in Melstacrop Plc rose 3.8 percent and conglomerate John Keells Holdings Plc ended 0.6 percent higher. Dialog Axiata Plc gained 0.7 percent. ($1 = 155.1000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

Weekly Government Securities Market – 23-02-2018

Treasury Bills and Bonds in Sri Lanka

Weekly Yield movement & Volume

Amidst political uncertainty, the yield shifted upwards throughout the week due to LG Poll results. The Treasury Bill auction saw yields spiking across all three maturities, i.e. 3-month, 6-month and 1-year by 22bps, 23bps and 17bps, to 8.24%, 8.52% and 9.45% respectively.

Liquidity & CBSL Holdings

A marginal decline in foreign buying interest was witnessed, foreign holding decreased by Rs 2.1 billion to record at Rs 322.0 billion. Overall Government securities increased against foreign buying interest, while the overall foreign holding percentage decreased to 6.5%.

Foreign Interest

A marginal decline in foreign buying interest was witnessed, foreign holding decreased by Rs 2.1 billion to record at Rs 322.0 billion. Overall Government securities increased against foreign buying interest, while the overall foreign holding percentage decreased to 6.5%.

Maturities for next Week

The Government securities market has Treasury Bill maturity amounting to Rs 21.9 billion, which needs to be settled on 2 March 2018. Further, the Government also needs to settle Rs 17.2 billion of Treasury Bond interest falling due 1 March 2018.

Sri Lankan stocks slip from over 3-month high on profit-taking

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

FEBRUARY 23, 2018 

COLOMBO, Feb 22 (Reuters) – Sri Lankan shares on Thursday snapped a five-session winning streak and eased from a more than three-month high on profit-booking, while foreign buying in Commercial Bank Plc boosted the daily traded turnover.

Hopes of political stability after two key parties decided to remain in the ruling coalition, allayed fears of a government collapse and that helped heavy buying to boost the day’s turnover.

The Colombo stock index ended 0.41 percent weaker at 6,571.73, slipping from its highest close since Nov. 6, 2017 hit on Wednesday.

Turnover stood at 1.54 billion rupees ($9.93 million), well above the year’s daily average of 869.6 million rupees.

Foreign investors bought a net 660.5 million rupees worth of shares, extending net foreign buying to 6.4 billion rupees worth of equities so far this year.

“There was a bit of selling today. Basically, whatever stocks moved up over the last few days were sold … may be due to profit-taking by a fund,” said Dimantha Mathew, head of research, First Capital Holdings.

“A large block of Commercial Bank shares was bought by foreigners, boosting the turnover.”

Shares in Ceylon Tobacco Company Plc fell 2.9 percent while conglomerate John Keells Holdings Plc lost 0.5 percent and Dialog Axiata Plc ended 0.7 percent down.

Shares in biggest listed lender Commercial Bank of Ceylon Plc, which accounted for 52.6 percent of day’s turnover, ended 0.7 percent up.

The index dropped 0.13 percent last week, ending a three-week winning streak.

$1 = 155.1500 Sri Lankan rupees Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan

CIM Sri Lanka partners with First Capital Holdings

Invest in Sri Lanka

From left: CIM Sri Lanka Membership Development Manager Sanjay Hettiarachchi, CIM Sri Lanka Chairman Brian Selvanayagam, First Capital Holdings Chief Executive Officer Dilshan Wirasekara, Nisansala Munasinghe, First Capital Holdings Branding and Marketing Services Manager 

Renewing a successful working partnership of three consecutive years, a Memorandum of Understanding (MOU) was signed between The Chartered Institute of Marketing (CIM) Sri Lanka and First Capital Holdings PLC, committing to goals mutually benefiting both organisations and strengthening the respective brand identities in the market.

Commenting on the partnership, CIM Sri Lanka Chairman Brian Selvanayagam said: “We are honoured to partner with the investment bank, First Capital Holdings. The cooperation is aimed at sharing industry insights through a series of initiatives planned throughout the year. We are grateful to First Capital’s continued support to help promote CIM and its activities in Sri Lanka.”

First Capital Holdings Director / Chief Executive Officer Dilshan Wirasekara said: “We are pleased to collaborate with a renowned professional body such as the Chartered Institute of Marketing Sri Lanka. We are confident that this partnership will contribute in enhancing cross-disciplinary know-how and the creation of new ideas, enabling us to maintain a competitive edge in the fast changing financial services industry.”

CIM Sri Lanka is the first International branch of CIM UK and is proud to claim the largest membership outside the UK. CIM Sri Lanka has always campaigned for high professional standards, greater recognition for the Profession and Marketing excellence in Sri Lanka through education, training and development.

First Capital Holdings is a full service investment bank, providing a diverse range of advisory services and financial products. The company’s integrated business platform comprises four specialised areas – capital markets advisory, wealth management, fixed income and equities. The company is listed on the Colombo Stock Exchange and is rated A- by ICRA Lanka Limited.

 

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 Sri Lanka, with a capital base of Rs. 2.2Bn. Maintaining its competitive edge, the Company channeled a volume of LKR 174 Bn Government Securities – Treasury Bills and Bonds Sri Lanka to the public in 2016/17.

Sri Lankan stocks hit over 3-month high; bluechips lead

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

FEBRUARY 22, 2018

COLOMBO, Feb 21 (Reuters) – Sri Lankan shares ended higher for a fifth straight session on Wednesday led by bluechips on hopes of political stability after two key parties decided to remain in the ruling coalition, allaying fears of a government collapse.

The Colombo stock index ended 0.32 percent firmer at 6,598.73, its highest close since Nov. 6, 2017.

“Interestingly, we saw some buying interest in blue chips and especially foreign interest is picking up,” said Dimantha Mathew, head of research, First Capital Holdings.

“Now that things are settling down, buying interest in bluechips is improving with continued retail buying.”

The two key coalition parties that were routed in a local election last week, sparking concerns of political instability, on Wednesday told the parliament that their government will continue.

Turnover stood at 829.4 million rupees ($5.35 million), marginally below the year’s daily average of 849.4 million rupees.

Foreign investors bought a net 171.6 million rupees worth of shares on Wednesday, extending net foreign buying to 5.8 billion rupees worth of equities so far this year.

Shares in Dialog Axiata Plc ended 0.7 percent higher, while conglomerate John Keells Holdings Plc gained 0.5 percent. The biggest-listed lender, Commercial Bank of Ceylon Plc, closed 1.5 percent firmer.

The index dropped 0.13 percent last week, ending a three-week winning streak. ($1 = 155.1500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

Sri Lankan stocks end at over 3-month high on hopes of political stability

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

FEBRUARY 21, 2018

COLOMBO, Feb 20 (Reuters) – Sri Lankan shares ended higher for a third straight day on Tuesday on hopes of political stability after the prime minister decided to stay in office and reshuffle his cabinet in the wake of a stinging loss in local elections for both parties in the ruling coalition.

The coalition parties held a cabinet meeting on Tuesday and said the island nation’s government plans to continue their tenure.

Prime Minister Ranil Wickremesinghe’s centre-right United National Party (UNP) and President Maithripala Sirisena’s centre-left Sri Lanka Freedom Party (SLFP) were routed by a party backed by former President Mahinda Rajapaksa in local polls on Feb. 10, plunging the government into a crisis.

The Colombo stock index ended 0.19 percent firmer at 6,577.84, hitting their highest close in more than three months.

“With signs of stability coming in, investors are re-entering the market. Foreign investors are also returning slowly,” said Dimantha Mathew, head of research, First Capital Holdings.

Turnover stood at 860.2 million rupees ($5.54 million), in line with the daily average of 850 million rupees.

Foreign investors bought a net 72.3 million rupees worth of shares on Tuesday, extending the net foreign buying to 5.6 billion rupees worth of equities so far this year.

Shares in Ceylon Cold Stores Plc ended 5 percent higher, while conglomerate John Keells Holdings Plc closed up 1.2 percent, Vallibel One Plc ended up 7.9 percent and the biggest-listed lender Commercial Bank of Ceylon Plc ended 0.7 percent firmer.

The index dropped 0.13 percent last week, after marking three straight weekly declines.

$1 = 155.3500 Sri Lankan rupees Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips

Sri Lankan stocks steady in dull trade; political woes weigh

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

FEBRUARY 20, 2018

COLOMBO, Feb 19 (Reuters) – Sri Lankan shares ended steady on Monday in thin trade amid political uncertainty after both parties in the ruling coalition suffered defeats in a local election earlier this month.

Turnover stood at 288.4 million rupees ($1.9 million), well below the daily average of 849.7 million rupees.

The Colombo stock index ended 0.03 percent firmer at 6,565.63, its highest close since Feb. 9.

Shares in Melstacorp Ltd rose 7 percent, while Trade Finance Plc gained 16.8 percent.

The index fell 0.13 percent last week, after gaining for three straight weeks.

“Very slow day as investors are waiting for political direction after the election debacle,” said Dimantha Mathew, head of research at First Capital Holdings.

Prime Minister Ranil Wickremesinghe’s centre-right United National Party (UNP) and President Maithripala Sirisena’s centre-left Sri Lanka Freedom Party (SLFP) were routed by a party backed by former President Mahinda Rajapaksa in local polls on Feb. 10, plunging the government into crisis.

Since the results, both parties have locked horns on how best to continue in the government. Sirisena’s party wants to form its own government, his party ministers have said, while Wickremesinghe’s party has said it is in the process of forming its own government.

Wickremesinghe, addressing the media on Friday said that the government will continue with a reshuffle of the cabinet.

Foreign investors bought a net 20.7 million rupees worth of shares on Monday, extending the net foreign buying to 5.5 billion rupees worth of equities so far this year. ($1 = 155.3000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

SL: Walking a tightrope

Sunday Times | 18. 02. 2018

Last week’s topsy-turvy local government election result has triggered uncertainty in whether the authorities will pursue with the IMF-led, painful but crucial economic reforms. At the Colombo stock market, normally the first sector to react to political developments, share prices fell but were seen, cautiously rallying.

Speaking to the Business Times, economists, stock market analysts and senior government officials, agreed that foreign investment and economic reforms would be affected in the short term.

“Some outflows were seen in most foreign traded blue-chip counters over the last few days following the elections. However, after the initial downtrend, the market is settling down as the political circles are also settling down,” said Dimantha Mathew, Head of Research at First Capital Holdings PLC.

It is widely believed that the government’s reversal at the poll was because it failed to respond to growing frustration in the rural countryside on issues like prolonged droughts, costly fertilizer and rising living costs. The glyphosate ban was a big issue among tea smallholders in the south.

Acknowledging these issues, a senior Finance Ministry official said the government will have to regain the confidence of masses by increasing welfare measures and giving handouts in the face of upcoming provincial council and general elections. “The Treasury has been sucked into a process of ‘funambulism’ (tight-rope walking) under the present circumstances,” he said, stressing on the word ‘funambulism” to explain the government’s dilemma.

While welfare measures amidst a massive debt burden, cash flow problems with dwindling revenue and foreign direct investment (which could be less than target), is a recipe for disaster, the government has a daunting task of balancing the sentiment of the people and fulfilling its promise to the International Monetary Fund (IMF), the official said explaining the crisis.

Economics Prof. Sirimal Abeyratne from the Colombo University believes the election verdict is a result of an administration not doing anything substantial for the past three years. “It was even clear from the sluggish economic performance. The election result has added more to the uncertainty; investors are likely to extend their wait and see’ attitude further,” he said.

The need for political stability for accelerated growth and foreign investment inflows was also espoused by Central Bank (CB) Governor Dr. Indrajit Coomaraswamy when he met journalists on Thursday.

He warned that Sri Lanka’s economic consolidation risks losing its current momentum if political instability continues but noted that economic reforms and other monetary policy measures “will have to continue” in accordance with the CB’S 2018 roadmap.

First Capital’s Mr. Mathew said that since there were signs (as of Friday) that there is unlikely to be any major change (in the coalition government), foreigners are likely to return to the market but at a much slower pace compared to the aggressive pace witnessed during the January 2018 when the market was on overdrive.

“The primary reason for this (slower pace) is some doubts being created whether the Government can still go ahead with some of the tough reforms that lies ahead as part of the IMF agreement,” he noted.

How would the IMF react if reforms are put on hold or slowed down? Prof. Abeyratne believes donor approaches are different. “They always work cordially and collaboratively with the governments. Even though they do not approve subsidies and handouts, they may not confront it unless we (desperately) want IMF help,” he explained.

The government is confronted with a dual approach of pursuing reforms while also providing some handouts. “You can always postpone the issues by sweeping these under the carpet. In such an instance even without any help from the government, the economy will move slowly and become resilient to the shocks at the end of the day,” Prof. Abeyratne said.

After a meeting of the Monetary Board, the CB decided to continue its policy of keeping interest rates high to reduce consumption, a decision which appears to have worked against the Government’s popularity.

Several businesses have been struggling with high interest rates which has affected the cost of funds and forced an increase in the prices of goods which in turn triggered a drop in demand. These mostly, wholesale traders have been trapped in a web of payments, borrowing from banks and then borrowings from money-lenders to pay off debt.

On the future of FDI, Mr. Mathew said they expect a slowdown in the first quarter of 2018 as investors wait and see whether the Government will go ahead with the economic reforms, specifically the (fuel) pricing formula which is due in March.

He said the initial expectation that FDIs may beat last year’s figure as well as reach about US$2.5 billion would be a tough call with the latest developments.