Tag Archives: Asset Management in Sri Lanka

Atchuthan Srirangan, Assistant Manager – Research at First Capital Holdings, with the Market Review on Ada Derana – 02.08.2018

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.

 

Amanda Lokugamage, Senior Research Analyst at First Capital Holdings, with the Market Review on Ada Derana – 29.07.2018

Stock 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 shares fall; foreign selling continues

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

JULY 19, 2018

COLOMBO, July 18 (Reuters) – Sri Lankan shares slipped on Wednesday from their highest close in nearly three weeks recorded in the previous session, as investors sold diversified and telecommunication shares.

Foreign investors sold net equities worth 34.1 million rupees on Wednesday, extending the year-to-date net foreign outflow to 2.7 billion rupees.

The Colombo stock index ended 0.31 percent weaker at 6,160.69.

“There is some profit-taking while foreign selling is still continuing,” said Dimantha Mathew, head of research, First Capital Holdings.

“We see some local buying slowly coming in to the market which is a good sign.”

Turnover stood at 543.8 million rupees ($3.40 million), less than this year’s daily average of 892.3 million rupees.

A downward revision in economic growth estimate by the central bank has also hurt sentiment, analysts said.

Economic growth in 2018 is likely to be between 4 percent and 4.5 percent, falling short of an earlier estimate of 5 percent, Central Bank Governor Indrajit Coomaraswamy said early this month.

Shares in Dialog Axiata Plc fell 1.4 percent, while conglomerate John Keells Holdings Plc ended 1.1 percent weaker and Melstacrop Ltd lost 2.2 percent. ($1 = 159.8000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

Sri Lankan shares slip from 2-week high

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

JULY 17, 2018

COLOMBO, July 16 (Reuters) – Sri Lankan shares edged lower on Monday from their highest close in two weeks in lighter-than-usual trading as foreign investors sold stocks.

The Colombo stock index ended 0.12 percent weaker at 6,130.62, slipping from its highest close since June 29 hit on Friday. It rose 0.5 percent last week, its first weekly gain in eight weeks.

“Today we saw some profit taking. There was some selling by those who managed to buy at the bottom,” said Dimantha Mathew, head of research, First Capital Holdings.

“There is not much of selling pressure. So we don’t think this selling will continue for long time.”

Turnover stood at 304.1 million rupees ($1.9 million), around a third of this year’s daily average of 895.8 million rupees.

The benchmark stock index hit its lowest close since March 30, 2017 on July 4, and has declined for 20 sessions in 27 through Monday.

A downward revision in economic growth estimate by the central bank has hit sentiment, analysts said.

Economic growth in 2018 is likely to be between 4 percent and 4.5 percent, falling short of an earlier estimate of 5 percent, the central bank’s governor, Indrajit Coomaraswamy, said early this month.

Foreign investors sold equities net worth 177.7 million rupees on Monday, extending the year-to-date net foreign sale to 2.6 billion rupees.

Shares in Cargills (Ceylon) Plc fell 3.7 percent, while Lanka ORIX leasing Co Plc lost 3.6 percent. The biggest listed lender Commercial Bank of Ceylon Plc closed 1.5 percent lower.

Investors are waiting for some positive news both on the economic and political front, said analysts, adding that the government’s policy implementation had been sluggish since both main parties in the ruling coalition lost local polls in February.

The International Monetary Fund said on June 20 that Sri Lanka’s economy remained vulnerable to adverse shocks because of sizable public debt and large refinancing needs. ($1 = 159.7000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

Political uncertainty seen dampening investor confidence

Economy Next – 16.07.2018

By First Capital Research

ECONOMYNEXT – Although economic fundamentals are improving with low inflation, stable interest rates and improving demand in overseas markets, political uncertainty in the run-up to elections may dampen investor confidence, First Capital Holdings said.

Economic growth is expected to pick up in the third and fourth quarters of 2018 and to accelerate further in 2019, they said in a research report.

“Stronger macro fundamentals, higher investments and pickup in consumer demand is likely to increase growth in 2019E to 5.0%,” the company’s mid-year economic outlook said.

“ Potential election in 2019 may also push authorities accelerate relaxation of para tariffs which may also support stronger consumer demand,” it said.

“With stable interest rates and low inflation, we expect the stability of the economy to further improve during 2018,” the research report said.

“The stable environment is expected to slowly improve business confidence and consumer demand towards 2H2018. We believe business confidence and consumer demand are currently below average and they are expected to normalize during the period.”

However, First Capital Holdings warned that the prevailing policy uncertainty is a major deterrent which may slow down the gradual improvement.

Following the local government elections, all eyes are on polls for Provincial Councils whose terms are in the process of expiring later this year and early next.

“A further defeat for the present government may worsen the prevailing political uncertainty. But an improvement in the voter base may provide some respite,” First Capital Holdings said.

Another major factor that is creating uncertainty is the forthcoming Presidential election in late 2019.

“None of the three major political parties have announced a clear candidate who would be contesting for the upcoming elections,” First Capital Holdings said.

“It is a major deterrent for any investor. It is an important step in forecasting possible policy direction for the future in order to assess the risk for long term investments.”

The research report noted that the government’s debt repayment pressure is easing with the central bank very successful in rolling over most of the debt at lower rates and spreading them over a period to prevent any bunching of debt in the future.

It also noted that economic growth in key markets in the US and Europe is reviving and that export growth momentum has been picking up over the last few months.
(COLOMBO, July 12, 2018)

First Capital downgrades exchange rate target to 161 rupees for end 2018

July 11, 2018 (LBO) – First Capital Research said they downgraded their exchange rate target from 159 rupees to 161 rupees per dollar for end 2018 since a stronger dollar is more likely in the coming months.

With four fed rate hikes on the cards over next 12 months, First Capital Research said they are targeting an exchange rate of 164.5 rupees per dollar over the next 12 months up to June 2019.

“Dollar index is expected to remain strong over the next 12 months while with continued reforms inflows into Sri Lanka debt and equity capital markets are likely with the attractive yields,” First Capital Research said

“Further Sri Lanka moves into the peak season of exports Sep-Mar. We expect more stability in the rupee in 2H2018, but downgrade our target to LKR161.”

First Capital expects the yield curve in government securities to peak during the third quarter of 2018 and registers a slow downtrend.

“Despite having some pressure in 1Q2019 it is not expected to be as high as 3Q2018, thereby, from bearishness at the start of 2018, we are now bullish on bonds beyond 3Q2018,”

“We believe 1Y, 5Y & 10Y trade within the bands of 9.0%-10.0%, 10.0%-11.0% & 10.5%-11.5%.”

First Capital, however, said that any breakaway from reform program (Deviations affecting IMF program) or political deadlock may result in breaking the upper bands of the tenors.

First Capital also expects market returns to be stronger despite slower earnings growth outlook of 5 to 7 percent.

“Healthy valuations may warrant a re-rating of the market providing returns of 13% market return over the next 6 months while targeting 15% return for 2019E supported by accelerating earnings growth to 10-12%.”

Dimantha Mathew, Head of Research at First Capital Holdings, with the Market Review on Ada Derana – 08.07.2018

Share Market 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.

First Capital’s Dimantha Mathew with the Market Review on Ada Derana

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)

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

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)