Tag Archives: Asset Management in Sri Lanka

Sri Lankan stocks end at over 3-week low in thin trade

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

MAY 09, 2018

COLOMBO, May 8 (Reuters) – Sri Lankan shares fell on Tuesday to more than a three-week low, dragged down by shares of beverage companies such as Distilleries Company of Sri Lanka Plc , while investors continued to await fresh cues from political and economic fronts.

The Colombo stock index ended 0.33 percent weaker at 6,485.57, its lowest since April 12. The index lost 0.37 percent last week, its second straight weekly fall.

“It was a very slow market as investors are still scared and they are worried …. they don’t see that the economy has picked up and they feel its still uncertain for equity investments though there are signs of improvement in the economy,” said Dimantha Mathew, head of research, First Capital Holdings.

Shares of Sri Lanka Plc ended 3.1 percent lower while Ceylon Cold Stores Plc fell 1.2 percent and Lanka ORIX Leasing Plc ended 1.9 percent weaker.

Conglomerate John Keells Holdings Plc ended 0.6 percent down and Sri Lanka Telecom Plc closed 1.1 percent weaker.

Analysts said depreciation of the rupee also weighed on the sentiment as it is likely to dent the profits of some listed firms that rely heavily on imports.

The Sri Lankan rupee hit a fresh low on Wednesday on importer demand for the U.S. currency, dealers said, but recovered after the central bank intervened in the market.

Fitch Ratings has said that recent political developments in Sri Lanka have created some uncertainty over reform momentum and fiscal consolidation, and prolonged upheaval could undermine investor confidence ahead of large external debt maturities in 2019-22.

Turnover stood at 601.6 million rupees ($3.82 million), less than this year’s daily average of 1.03 billion rupees.

Foreign investors bought a net 100.9 million rupees worth of equities on Tuesday, but the market has seen a net foreign outflow to 487 million rupees worth of equities so far this year. ($1 = 157.4000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

Dimantha Mathew, Head of Research at First Capital Holdings, with the Market Review on Ada Derana – 25.04.2018

 

 

 

 

 

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.

Weak link between CSE and global market trends hinders earnings growth: analysts

Daily Mirror | 18.04.2018

The weak link between Colombo Stock Exchange (CSE) and global market trends is keeping earnings growth of CSE indices below growth rates of competing markets.
A latest regional World Bank report indicated the correlation between global trends and stock market developments in Pakistan and Sri Lanka are weaker compared to other regional peers such as India and Bangladesh.
CSE’s main indices only recorded single digit growths in 2017 against the double digital growths across the global markets.

 

CSE’s S&P SL Index comprising of top 20 blue-chip companies only recorded a gain of 4.93 percent in 2017 while All Share Price Index (ASPI) gained in 2.39 percent, which were well below the performance of global markets such as India’s BSE Sensex, which gained 29.58 percent and the NSE Nifty that recorded a gain of 30.28 percent.

 

Similarly, Hong Kong’s HIS gained 41 percent, United States’ DOW 30.28 percent, Philippine’s Pcomp 27.15 percent and Brazil’s IBOV 28.6 percent in 2017.

 

Speaking to Mirror Business, First Capital Holdings’ Head of Research, Dimantha Mathew said CSE needs to plug itself into global markets in order to achieve high growth in earnings as Sri Lanka’s capital market is small compared to most of the global markets.

 

He added that being connected to global trends is a factor which foreign investors view positively despite increased volatility.
Stock market analysts opine that lack of political will in capital market reforms, inactivity of institutional investors and the absence of external sector listed companies in CSE were major factors for the weak link.

 
Candor Group Director, Ravi Abeysuriya said the prime reason for the weak link was due to the inactivity of institutional players in the market, which includes both state and private institutional investors.
According to both Mathew and Abeysuriya, the state institutions which make up the majority of institutional investors in the CSE have been virtually non-existent over the last 3-4 years, which had adversely impacted the market sentiment and the confidence of private institutional investors.

 
“There has been a significant slowdown of trading activities of local institutions—mainly government related institutions. EPF, Sri Lanka Insurance and NSB were virtually non-existent in the market, that’s why the activity died off in the market in terms of trading,” said Mathew.

 

Abeysuriya emphasized that Sri Lanka’s failure to attract local investors to the market was influenced by political issues and lack of political will to drive capital market reforms.
“Never-ending investigation on stock market manipulations and other complaints have been dragging on for years without a judgment and are adversely impacting the investor confidence and sentiment” Abeysuriya said.

 

Mathew said CSE remains to be an attractive market for foreign investors due to cheap valuations which are at the 10-11 times of P/E ratio at the moment. However, he added that low valuations are holding off the large export-oriented companies such as Brandix and MAS from entering into stock market.
He said that Sri Lanka’s record high foreign inflows to the CSE last year was due to “extremely low” valuations and positive sentiment of global investors on the South Asian region.

 

Mathew noted that Sri Lanka’s recent successful sovereign bond issue of US $2.5 billion will positively impact the foreign investor participation in the CSE in coming months. However, he raised concerns over the delay in government’s reform agenda, which is likely to impact the foreign investor sentiment.

 

Meanwhile, Abeysuriya noted that the delays over implementing the proposed new Securities Exchange Act could result in the country losing US $250 million loan committed by ADB to implement the Capital Market Development Programme (CMDP) in Sri Lanka.

Sri Lankan stocks edge higher from 8-week low

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

MARCH 27, 2018

COLOMBO, March 26 (Reuters) – Sri Lankan shares crawled higher on Monday from their lowest close in more than eight weeks as blue chip stocks gained, but negative sentiment over the island nation’s slower economic growth weighed on the market.

The Colombo stock index closed 0.08 percent firmer at 6,448.60, edging up from its lowest close since Jan. 24 hit on Friday.

The bourse fell 1 percent last week, its fourth straight weekly drop.

Sri Lanka’s economy grew by 3.1 percent in 2017, the slowest pace in 16 years and well below the 4.5 percent seen in 2016, revised government data released last week showed.

Investors are waiting for the central bank’s interest rate decision in April, said Dimantha Mathew, head of research, First Capital Holdings.

Turnover was 1.6 billion rupees ($10.3 million), more than this year’s daily average of around 956.6 million rupees.

Shares in conglomerate John Keells Holdings Plc rose 0.8 percent, while Ceylinco Insurance Plc ended 2.3 percent firmer and biggest listed lender Commercial Bank of Ceylon Plc gained 0.1 percent.

Foreign investors sold a net 354.9 million rupees worth of shares, but they have been net buyers of 6.9 billion rupees worth of equities so far this year

Analysts said an increase in retail fuel prices also weighed on investor sentiment.

Sri Lankan fuel retailer Lanka IOC Plc raised retail prices for gasoline and diesel, the company said on Saturday, due to losses incurred after the government’s failure to implement a pricing formula. ($1 = 156.1000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

Sri Lankan stocks extend fall on growth worries

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

MARCH 21, 2018

COLOMBO, March 20 (Reuters) – Sri Lankan shares fell for a second straight session on Tuesday and posted their lowest close in seven weeks in low trade, as investors sold diversified and beverage stocks on worries over slower economic growth, brokers said.

The statistics department withdrew its 2017 full-year and fourth-quarter GDP data on Friday, a day after saying the economy expanded 3.1 percent last year, the slowest pace in 16 years, and 1.4 percent in the fourth quarter.

The Colombo stock index fell 0.48 percent to 6,462.50, its lowest close since Jan. 29. It dropped 0.6 percent last week in its third straight weekly decline.

“It’s a slow day with both local and foreign investors taking a wait-and-see approach,” said Dimantha Mathew, head of research, First Capital Holdings.

He said investors took a pause due to confusion following the withdrawal of GDP data and ahead of the U.S. Federal Reserve’s policy decision.

Turnover was 286.7 million rupees ($1.84 million), the lowest since Feb. 19 and less than a third of this year’s daily average of around 942.3 million rupees.

Shares in conglomerate John Keells Holdings Plc dropped 2.6 percent, Nestle Lanka Plc fell 0.5 percent and Sri Lanka Telecom Plc declined 2.2 percent.

Foreign investors sold a net 27.8 million rupees worth of shares, but they have been net buyers of 7.2 billion rupees worth of equities so far this year. ($1 = 156.0500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Amanda Lokugamage, Senior Research Analyst at First Capital Holdings, with the Market Review on Ada Derana – 18.03.2018

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 edge up as foreign investors return

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

MARCH 13, 2018

COLOMBO, March 13 (Reuters) – Sri Lankan shares rose slightly on Tuesday and posted their highest close in nearly two weeks as investors picked up beverage and telecom stocks, and foreign investors returned to the market following a communal violence last week, dealers said.

Foreign investors bought a net 1.2 billion rupees ($7.71 million) worth of shares, extending the year-to-date net foreign inflow to 7.3 billion rupees worth of equities.

Analysts said local and foreign investors returned to the market a week after a wave of anti-Muslim attacks by Sinhalese Buddhist hardliners in the central highlands district of Kandy.

The Colombo stock index ended 0.11 percent firmer at 6,554.83.

“It is a positive sign that both locals and foreigners are buying after a long wait,” said Dimantha Mathew, head of research, First Capital Holdings.

Turnover was 2.5 billion rupees on Tuesday, the highest since Feb. 26 and more than double of this year’s daily average of around 960.4 million rupees.

Shares in Asian Hotels and Properties Plc ended up 3.8 percent, Dialog Axiata Plc gained 1.5 percent and Singer Sri Lanka Plc rose 2.7 percent. ($1 = 155.6500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Amanda Lokugamage, Senior Research Analyst at First Capital Holdings, with the Market Review on Ada Derana – 11.03.2018

First Capital's Amanda Lokugamage

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.

FIRST CAPITAL FOSTERING STRONG BONDS WITH REGIONAL CLIENTS

Dilshan Wirasekara Director / CEO of First Capital, staff members Kosala Liyanagedara, Naveen Samarasekera, Anushi Ranawaka, Sewwandi Kathriarachchi, Rangajeewa Abeywickrama, Nisansala Munasinghe at Branch Opening Ceremonies in Negombo, Kurunegala and Kandy.

March 06th 2018 – First Capital Holdings PLC, further expanded its branch network in an effort to forester stronger bonds with regionally based clients. During the last year First Capital added a new branch in Negombo to its existing network, while also re-locating offices in Kandy, Kurunegala and Matara to state-of-the-art, stand-alone branches providing value-added products and solutions to both issuer and investor clients.

The First Capital branch network cover all product offerings from the Investment Bank’s five subsidiary businesses, consisting services in Government Securities, Stockbrokering, Unit Trusts, Wealth Management, Capital Markets Advisory including Debentures, Commercial Papers, Trust Certificate, Share/ Business Valuations and Mergers and Acquisitions.

“We embarked on a strategy of improving our branch network, to complement the already existing delivery channels, as we feel it’s an important investment made to broad base the access to capital market knowledge and investment across the country said Director and Chief Executive Officer of First Capital Holdings PLC, Dilshan Wirasekara.

“We understood that our customers seek comfort in approaching a more tangible branch premises, discussing their investments over a cup of tea. This builds a lot of confidence between our clients and our brand. Our branch expansion is aimed to accommodate these needs” said Senior Manager – Branch Operations Menaka Wavegedara.

“First Capital takes this opportunity to express our appreciation for the continued trust placed on us by our loyal clients and assure that we strive to exceed the expectations placed on us.” Wavegedara concluded.

The new office will continue to offer the same efficient and friendly service delivering reliable advice and awareness on investing for the benefit of its customers.

The branch contact details are as follows; Negombo Branch Office (located on the Chilaw-Colombo Main Road) +94 31-2233299, Kandy Branch Office (located on Kotugodella Veediya) +94 81 2 236 010, Kurunegala Branch Office (located on Mihindu Mawatha) +94 37 2 222 930 and Matara Branch Office (located on Anagarika Dharmapala Mawatha) +94 41 2 222 988. The First Capital Holdings PLC head office is located at No 02 Deal Place Colombo 00300

Company information –

First Capital Holdings PLC (First Capital Group) is an investment bank comprising of First Capital Treasuries PLC, First Capital Limited, First Capital Asset Management Limited, First Capital Equities (Private) Limited and First Capital Markets Limited. The company’s Board of Directors comprises of Nishan Fernando – Chairperson, Dinesh Schaffter – Managing Director, Eardley Perera, Ms. Minette Perera, Chandana de Silva and Dr. Nishan de Mel as Independent Directors and Dilshan Wirasekara as Director and Chief Executive Officer.

The company is listed on the Colombo Stock Exchange and is rated “A-” with a stable outlook by ICRA Lanka.

Cement price hiked by Rs. 30 per bag

Daily FT | 06-03-2018

Broking firms FC Capital Research yesterday downgraded public listed Tokyo Cement to “Hold” from “Strong buy” despite the increase in price of a 50kg bag of cement.

The downgrade was primarily on account of apparent shrink in market share due to intensified competition leading to a stagnant topline despite the modest 5%YoY growth registered in cement industry during 2017.

Further,  with the distribution cost continuing on its increasing trend to register a 12%YoY growth for 9MFY18 adversely impacting the earnings First Capital Research has slashed TKYO revenue forecast by almost -15% for FY18E and -24% for FY19E while incorporating a more steady moderate growth in top line spreading to FY20E and FY21E. However, we expect TKYO to maintain its margins at 25% supported by enhanced capacity levels coupled with cost savings on energy, thus upholding the earnings at c.LKR 3.4Bn in FY19E. Amidst the revenue downgrade, TKYO earnings expectations have reduced by LKR 577Mn and LKR 1.0Bn for FY18E and FY19E generating a decent c.+4% earnings growth in FY19E. As a result, First Capital Research revised its fair value for TKYO.N for FY19E downwards to LKR 64.0 (previous LKR 94.0) while TKYO.X is revised to LKR 54.4 (previous LKR 80.0) providing an overall return of 12% and 14% respectively thus downgrading to HOLD on both TKYO.N/X.