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Sri Lankan shares extend fall to near 15-month closing low

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

JUNE 29, 2018

COLOMBO, June 28 (Reuters) – Sri Lankan shares declined for a fourth straight session on Thursday and posted their lowest close in nearly 15 months, as foreign investors continued to offload the island nation’s risky assets, while month-end settlements also weighed on the bourse.

The Colombo stock index ended 0.11 percent weaker at 6,181.48, its lowest close since April 4, 2017.

“Foreign selling has not stopped yet which is pushing the market down,” said Dimantha Mathew, head of research, First Capital Holdings.

“Today we saw some foreign buying and that absorbed the selling pressure to some extent. Margin calls are also there.”

Foreign investors net sold equities worth 196.1 million rupees ($1.24 million), extending the year-to-date foreign outflows to 1.2 billion rupees this year.

Turnover was 1.3 billion rupees, more than this year’s daily average of 934.9 million rupees.

Shares of Cargills (Ceylon) Plc fell 4.4 percent, conglomerate John Keells Holdings Plc ended 0.7 percent weaker, Bukit Darah Plc declined 3.7 percent and Commercial Bank of Ceylon Plc, the country’s biggest listed lender, slipped 0.7 percent.

Finance Minister Mangala Samaraweera said last week the economy was likely to grow about 4.5 percent this year, below a central bank estimate of 5 percent.

The International Monetary Fund (IMF) said on June 20 Sri Lanka’s economy remained vulnerable to adverse shocks because of sizable public debt and large refinancing needs.

Ratings agency Moody’s said on Wednesday a strengthening U.S. dollar since mid-April has increased the credit risk of several emerging markets, including Sri Lanka, due to currency depreciation.

Moody’s said a strong dollar would also lead to a drop in foreign exchange reserves of countries such as Argentina, Ghana, Mongolia, Pakistan, Sri Lanka, Turkey, and Zambia.

Sri Lankan markets were closed on Wednesday for a public holiday. ($1 = 158.1000 Sri Lankan rupees) (Reporting by Ranga Sirilal; Editing by Subhranshu Sahu)

Weekly Government Securities Market – 28-06-2018

Stock Market Sri Lanka

Sri Lankan shares hit near 15-mth closing low on margin calls, foreign selling

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

JUNE 27, 2018

COLOMBO, June 26 (Reuters) – Sri Lankan shares fell for a third straight session on Tuesday and posted their lowest close in nearly 15 months as margin calls triggered selling and as foreign investors continued to offload the island nation’s risky assets.

The Colombo stock index ended 0.52 percent weaker at 6,188.05, its lowest close since 4 April 2017.

“Margin calls are coming up and selling is accelerating. Foreign selling is also dragging the market,” said Dimantha Mathew, head of research, First Capital Holdings.

Foreign investors net sold equities worth 26.4 million rupees, extending the year-to-date foreign outflows to 978.7 million rupees this year.

Turnover was 541.2 million rupees ($3.42 million), well below this year’s daily average of 931.9 million rupees.

Shares of Sri Lanka Telecom Plc lost 5.8 percent, while conglomerate John Keells Holdings Plc ended 1.3 percent weaker, Hatton National Bank Plc closed 2.2 percent down and Ceylon Tobacco Company Plc ended 0.8 percent lower.

Finance Minister Mangala Samaraweera said last week the economy was likely to grow about 4.5 percent this year, below a central bank estimate of 5 percent.

The International Monetary Fund (IMF) on Wednesday said Sri Lanka’s economy remained vulnerable to adverse shocks because of sizable public debt and large refinancing needs.

Stock, bond and foreign exchange markets are closed on Wednesday for a public holiday. ($1 = 158.2500 Sri Lankan rupees) (Reporting by Ranga Sirilal; Editing by Vyas Mohan)

FC Research issues Quarterly Results Overview

Stock Market Sri Lanka

March 2018 Quarter earnings were up by 28.5% YoY for 282 companies, according to the Quarterly Results Overview released by First Capital Research.

March 2018 quarter earnings spiked by 28.5% YoY to Rs 98.0 billion, which includes one-off profit, arising from disposal of Janashakthi General (approximately Rs 7.0 billion) by JINS and UAL’s change in the contract liability due to transfer of one-off surplus amounting to Rs 3.4 billion.
Excluding the two one-off gains, overall market earnings grew by 15.4% YoY to Rs 87.5 billion dominated by healthy performances in Food, Beverage and Tobacco (+41% YoY), Capital goods (+26% YoY), and Banking (+21% YoY) overcoming the negative effect of Diversified Financial (-11% YoY), Material (-36% YoY) and Real Estate (-60% YoY).
The Food, Beverage and Tobacco, Bank & Capital Goods sectors boosted earnings performance, the report added.

Food, Beverage and Tobacco sector saw an impressive earnings growth of 41% YoY to Rs 17.0 billion, driven by LION (+256% YoY), MELS (+2273% YoY) and DIST (+134% YoY). The banking sector continued to remain the largest contributor to earnings by achieving a profit Rs 17.3 billion (+21% YoY) led by SAMP (+41% YoY), HNB (+21% YoY) and COMB (+14% YoY). Capital Goods sector earnings saw growth of +26% YoY to Rs 20.1 billion, mainly driven by JKH (+100% YoY) and AEL (+177% YoY). JKH profits were boosted due to UAL’s contractual liability change resulting from the one-off surplus of Rs 3.4 billion while AEL’s profits were up on the back of fair value gains of Rs 2.4 billion on its Investment Property.
Diversified Financial, Material and Real-estate sectors weakened the earnings growth, however. Diversified sector saw earnings dipping by -11% YoY to Rs 15.2 billion due to substantial profit in LOLC (-74% YoY) resulting from large one-off gain in the last comparative quarter (March 2017). Material sector earnings saw a decline of -36% YoY to Rs 2.0 billion, driven by TKYO (-131% YoY) and DIPD (-57% YoY). TKYO’s earnings were affected by higher cost of sales, which eroded gross margin coupled with higher finance cost (+123% YoY), while DIPD earnings were affected by higher taxation in 4QFY18, the release concluded.

Bloomberg Comment – 25-06-2018

LKR Seen Supported by Flow From Loan Facility: Inside Sri Lanka
2018-06-25 04:14:45.831 GMT
By Anusha Ondaatjie

(Bloomberg) — The Sri Lankan rupee is likely to find support from expectations of inflows from a loan facility, according to First Capital.

* USD/LKR drops 0.1% to 158.80 after falling 0.4% last week

* A $1b loan facility is expected this week or next, and will give further boost to the currency, says Dimantha Mathew, head of research at First Capital in Colombo

** “We feel foreign outflows from government debt market will also dry up,” helping the currency stabilize around current levels, he says

* Yield on 10% bonds due March 2023 slipped 3bps to 10.42% on Friday: data compiled by Bloomberg

* The government is planning to sell up to $700 million of development bonds with submission bids closing today; settlement date is on July 2

* Overseas investors sold a net $0.5m of local stocks on Friday, paring inflows for this month to $2.8m: exchange data

Amanda Lokugamage, Senior Research Analyst at First Capital Holdings, with the Market Review on Ada Derana – 24.06.2018

Share Market Sri Lanka

First Capital’s Amanda Lokugamage 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 end steady, marking fifth straight losing week

ATCHUTHAN SRIRANGAN, ASSISTANT  MANAGER – RESEARCH AT FIRST CAPITAL HOLDINGS PLC, SPEAKS TO REUTERS

JUNE 25, 2018

COLOMBO, June 22 (Reuters) – Sri Lankan shares ended steady on Friday, staying close to the 14-month low hit this week and marking their fifth straight week of losses.

The Colombo stock index ended 0.01 percent weaker at 6,228.15, hovering near its lowest close since April 2017 hit on Wednesday. The bourse fell 1.63 percent this week.

“Though the market is attractive investors are still awaiting direction. We will see sideways movement for the next couple of days as the sell-off has stopped,” said Atchuthan Srirangan, assistant manager – research, First Capital Holdings Plc.

Turnover was 277.4 million rupees ($1.8 million), well below this year’s daily average of 942 million rupees.

Foreign investors sold equities net worth 72.7 million rupees, extending the year-to-date net foreign outflows to 934.3 million rupees of shares so far this year.

Shares of Dialog Axiata Plc ended 0.2 percent weaker, while Melstacorp Ltd fell 0.9 percent.

Finance Minister Mangala Samaraweera on Tuesday said the country’s economy is likely to grow around 4.5 percent this year, below the central bank estimate of 5 percent in a sign political uncertainty is curbing a more robust recovery after a weak 2017.

The International Monetary Fund (IMF) on Wednesday said Sri Lanka’s economy remains vulnerable to adverse shocks because of sizable public debt and large refinancing needs. ($1 = 158.7000 Sri Lankan rupees) (Reporting by Ranga Sirilal; Editing by Amrutha Gayathri)

Bloomberg Comment – 18-06-2018

LKR Bond Yields Edge Higher Ahead of GDP Data: Inside Sri Lanka (Bloomberg)
2018-06-18 03:24:52.326 GMT

By Anusha Ondaatjie

(Bloomberg) — Yields on Sri Lankan bonds edged higher ahead of the release of 1Q GDP data.

* Statistics dept to release growth figures at 3 pm local time Monday; local markets were shut Friday for a public holiday

* Yield on 10% govt bonds due March 2023 rose 2bps to 10.43% on Thursday: data compiled by Bloomberg

* “It will be very critical to see whether the economy has picked up,” says Dimantha Mathew, head of research at First Capital in Colombo

** “If growth is lagging, it could tilt the central bank toward an easing bias, which could help prop up bond prices”

* USD/LKR capped a fourth straight weekly gain on Friday, after reaching a record 160.25 on Thursday

* Overseas funds sold a net $0.2m of local stocks Thursday, paring inflows for this month to $3.8m: exchange data

Atchuthan Srirangan, Assistant Manager – Research at First Capital Holdings, with the Market Review on Ada Derana – 17.06.2018

Stock Market 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.