Tag Archives: Private Wealth Management in Sri Lanka

Sri Lankan shares fall on profit-taking; foreign buying continues

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

JANUARY 12, 2018

COLOMBO, Jan 11 (Reuters) – Sri Lankan shares ended marginally weaker on Thursday as recent gainers witnessed profit-booking, while foreign buying in the island nation’s risky assets curbed losses.

The Colombo Stock Index ended 0.1 percent lower at 6,49502.96.

Turnover stood at 531.9 million rupees ($3.46 million) on Thursday, less than last year’s daily average of 915.3 million rupees.

Foreign investors net bought shares worth 23.9 million rupees on Thursday, extending the net foreign inflow in this year to 2.24 billion rupees.

They had net bought 18.5 billion rupees worth equities in 2017 and 633.5 million rupees in 2016.

“There was bit of profit-taking in stocks which gained last few days. Activity has come down as investors are waiting to see the direction,” said Dimantha Mathew, head of research, First Capital Holdings.

The bourse hit a near two-month high on Monday as declining interest rates and expectations of higher economic growth boosted investor appetite for risky assets.

Shares in Sri Lanka Telecom Plc ended 2.4 percent weaker while conglomerate John Keells Holdings Plc ended 0.9 percent down.

Access Engineering Company Plc, which on Wednesday said its net profit for the financial year 2017/18 will see a rise of more than 10 percent, ended 0.9 percent higher.

Treasury bill rates fell between March and December last year, mainly driven by foreign buying in Treasury bonds, resulting in a decline in interest rates.

The country’s 2018 economic growth trajectory is likely to help boost market sentiment, analysts said.

Sri Lanka’s economic growth in 2018 is forecast at 5-5.5 percent, against an anticipated four-year low of less than 4 percent last year, central bank governor Indrajit Coomaraswamy said last week. ($1 = 153.7000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

First Capital is an investment bank providing a full range of financial advisory and services. The Company’s research deliver heightened perspective in fundamental research aiding Share Market Investment in Sri Lanka. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis. With fundamental research coverage of 62 listed securities (reflecting approximately 65% market capitalization) across 15 sectors in Share Market Investment in Sri Lanka.

Sri Lankan shares slip from near 7-week high on profit-taking

ATCHUTHAN SRIRANGAN, SENIOR RESEARCH ANALYST AT FIRST CAPITAL HOLDINGS PLC, SPEAKS TO REUTERS

COLOMBO, Jan 9 (Reuters) – Sri Lankan shares ended lower on Tuesday, slipping from a near seven-week high hit in the previous session, as investors booked profits in blue chip stocks, while foreign traders continued buying the island nation’s risky assets.

The Colombo Stock Index ended 0.2 percent weaker at 6,527.14. The bourse rose 2.3 percent last week, in its second straight weekly gain.

Turnover stood at 546.8 million rupees ($3.56 million) on Tuesday, less than last year’s daily average of 915.3 million rupees.

Foreign investors net bought shares worth 205.5 million rupees on Tuesday, extending the net foreign inflow in this year to 2.2 billion rupees.

They had net bought 18.5 billion rupees worth equities in 2017 and 633.5 million rupees in 2016.

“It’s a small pullback due to some kind of profit-taking,” said Atchuthan Srirangan, senior research analyst, First Capital Holdings PLC.

“There was selling in John Keells. Investors will wait to see whether the selling will continue or will the market absorb the pressure.”

Analysts expect the market to settle at 6,600 levels.

Shares in leading fixed line telephone operator Sri Lanka Telecom Plc ended 4.8 percent down, while conglomerate John Keells Holdings Plc closed 0.7 percent lower.

Treasury bill rates fell 188 basis points to 216 basis points between March and end-December 2017, mainly driven by foreign buying in treasury bonds, resulting in declining market interest rates.

The country’s 2018 economic growth trajectory is likely to help boost market sentiment, analysts said.

Sri Lanka’s economic growth in 2018 is forecast at 5-5.5 percent, against an anticipated four-year low of less than 4 percent last year, central bank governor Indrajit Coomaraswamy said on Wednesday.

The central bank kept its benchmark interest rates unchanged in December, saying inflation and private sector credit growth have cooled to manageable levels as policy makers focus on supporting a slowing economy.

$1 = 153.7000 Sri Lankan rupees Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips

First Capital is an investment bank providing a full range of financial advisory and services. The Company’s research deliver heightened perspective in fundamental research aiding Share Market Investment in Sri Lanka. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis. With fundamental research coverage of 62 listed securities (reflecting approximately 65% market capitalization) across 15 sectors in Share Market Investment in Sri Lanka.

Capital market wish list for the New Year – Interest rates down

Sunday Times | 31.12.2017

By First Capital Research

Next year will see banking interest rates adjust downwards in 1H2018 similar to 4Q2017 to be in line with the dip in yields of Government Securities which is generally a positive sign for equity market as investors may look at alternative investment opportunities for bank FDs, analysts say.

“As long as bank FDs remain at or above 13 per cent-15 per cent is likely to be considered an attractive safe return for most investors diverting funds into fixed income instruments which were the cast throughout 2017,” Dimantha Mathew Head of Research First Capital Holdings PLC said.

He added that with the dip in government securities yields bank interest rates would follow a similar course supported by the expected reduction in the ceiling of the interest rates on FDs for finance companies by December 31. “Ceiling rates for one year which is currently at 13.55per cent is expected to come down by at least 130-140 basis points to about 12.2 per cent. These rates is primarily for finance companies and bank interest rates we believe are likely to trickle down and hover around 10-11 per cent during 1H2018 and be maintained around the same level during 2H2018 as well.”

With equity markets having higher risk premium which is around 8 per cent to the risk free rate, it currently provides an expected return of around 16 per cent-17 per cent down from around 20 per cent-21 per cent about six months ago, he added.

“However, the current tight monetary policy has slowed down the economy significantly reducing earnings growth for most companies. This situation is expected to ease off towards 2H2018. Therefore it is likely to have slightly better earnings performance in 2018/19 compared to the weak performance we are currently seeing in 2017/18. We believe overall market earnings are likely to grow by a modest 5 per cent-7 per cent during 2018/19 supported by a recovery in economic performance in the 2H2018. This is likely to accelerate to 10 to 12 per cent towards 2019/20 backed by further improvement in economic health of the country and also easing of the monetary policy with more stability in the system.”

Market returns are likely to be slow but stay positive in the 1H2018 due to attractive valuations prevailing in the economy and is likely to improve in the 2H2018 supported by expectations of a better economic outlook and earnings performance, analysts say. “We expect overall market returns are likely to be 10 to 12 per cent above the expected earnings performance with some re-rating with an expected better earnings outlook in the future. In terms of the ASPI index it is only likely to reach 7000 (+650 points) towards end of 2018. Market returns are likely to accelerate towards 2019 to about 15 per cent with the actual earnings performance and renewed investor confidence. Index is likely reach 8000 level (+1000 points) towards 2019. These targets however are highly dependent on the current stable outlook and reform agenda continuing during 2018 as well,” Mr. Mathews added.

Analysts say that the key sectors that are likely to outperform the market and expected provide high returns are the banking sector, building materials sector and apparel sector while the energy sector also may turnaround depending on the implementation of the pricing formulas.

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.

Sri Lanka keeps rates steady to support a sluggish economy

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

DECEMBER 28, 2017

COLOMBO, Dec 28 (Reuters) – Sri Lanka’s central bank kept its benchmark interest rates unchanged on Thursday, saying inflation and private sector credit growth have cooled to a manageable level as policy makers focus on supporting a slowing economy.

The monetary authority said high food prices caused by supply disruptions could keep headline inflation somewhat elevated in the immediate future, but prices are expected to return to the desired level towards the end of first quarter of 2018.

“Although near term growth prospects remain subdued, it is anticipated that the economy would recover in 2018 due to continuous surge in exports and investments induced by foreign direct investments,” the central bank said in a statement.

As widely expected, the central bank kept the standing deposit facility rate (SDFR) at 7.25 percent and standing lending facility rate (SLFR) at 8.75 percent. The previous rate increases have dragged on the $81 billion economy, which grew at an annual pace of 3.7 percent in the first nine months of 2017, lagging the 4.0 percent growth in the year-ago period.

In a post-policy press briefing, central bank chief Indrajit Coomarswamy said growth is expected to come in below 4 percent for this year, shaving off further from its downgrade last month of output to expand between 4 percent and 4.5 percent.

The original 2017 growth forecast was 5.0 percent. The country was hit by the most severe drought in 40 years in the first quarter and the worst flooding in 14 years in May.

The central bank said the yields on government securities have eased from their peak, correcting some disparity that existed between the policy rates and the yields on sovereign securities.

The International Monetary Fund (IMF) earlier this month urged Sri Lanka to maintain a tightening bias on monetary policy until clear signs emerge that inflationary pressures and credit growth are moderating. Coomaraswamy last month told Reuters that the monetary authority does not see a need for a rate rise because core inflation is running low. L3N1NY51C]

The central bank has said it wants to curb credit growth to 15 percent by year-end. Annual private sector credit growth slowed to 15.4 percent in November, well off a near four-year high of 28.5 percent hit in July 2016.

Consumer inflation was up 7.6 percent in November from a year earlier, slowing from a record high of 7.8 percent hit in the previous month. Core inflation, which excludes volatile commodities, slowed to 5.2 percent last month from 5.8 percent in October.

“At the moment things are in line. The concern is that the GDP has slowed down and the credit growth is also slowing down. If the slow down continues, there is a possibility of cutting rates,”said Dimantha Mathew, head of research at First Capital Holdings.

But he said the central bank would be watchful until the long-delayed local government election scheduled for Feb. 10.

The central bank has tightened monetary policy four times since December 2015 through March this year to fend off pressure on the fragile rupee and curb stubbornly high credit growth that stoked inflation.

 

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 providing a full range of financial advisory and services. The Company’s research deliver heightened perspective in fundamental research aiding Share Market Investment in Sri Lanka. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis. With fundamental research coverage of 62 listed securities (reflecting approximately 65% market capitalization) across 15 sectors in Share Market Investment in Sri Lanka.

Sri Lankan stocks hit 3-wk closing high in holiday-thinned trading

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

DECEMBER 27, 2017

COLOMBO, Dec 27 (Reuters) – Sri Lankan shares touched a near three-week closing high on Wednesday as investors waited for clues from the central bank’s monetary policy review later in the week, with trading muted by the holidays after Christmas.

Sri Lanka’s central bank is expected to keep its key interest rates unchanged this week, a Reuters poll showed, as policymakers focus on supporting the slowing South Asian economy while remaining vigilant to still high inflationary pressures.

The Colombo Stock Index ended 0.14 percent firmer at 6,359.06, its highest since Dec. 8.

“Trading blue chip counters moved up slightly helping the index to end positive but the market is very dull as most of the brokers and investors are on holiday,” said Dimantha Mathew, head of research at First Capital Holdings.

Shares in Peoples Leasing Plc rose 0.6 percent, while Overseas Realty Plc ended 2.9 percent higher and Hemas Holdings Plc gained 0.8 percent.

Turnover stood at 263.3 million rupees ($1.73 million), just above a quarter of this year’s daily average of 920.5 million rupees.

Foreign investors sold 130.1 million rupees net worth of shares on Wednesday, but they have bought 18.2 billion rupees net worth equities so far this year. ($1 = 152.6000 Sri Lankan rupees) (Reporting by Ranga Sirilal; Editing by Amrutha Gayathri)

First Capital is an investment bank providing a full range of financial advisory and services. The Company’s research deliver heightened perspective in fundamental research aiding Share Market Investment in Sri Lanka. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis. With fundamental research coverage of 62 listed securities (reflecting approximately 65% market capitalization) across 15 sectors in Share Market Investment in Sri Lanka

First Capital’s Atchuthan Srirangan with the Market Review on Ada Derana – 24.12.2017

Invest in 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.

Sri Lankan stocks hit near 2-wk closing high

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

DECEMBER 27, 2017

COLOMBO, Dec 26 (Reuters) – Sri Lankan shares touched a near two-week closing high on Tuesday, as investors picked up banking and diversified stocks, with muted trading as investors went on holiday in the Christmas week.

Investors were also waiting for direction on interest rates when the central bank unveils its monetary policy later this week, analysts said.

The Colombo Stock Index ended 0.42 percent firmer at 6,350.30, its highest since Dec. 15.

“The overall uptrend is due to some window-dressing in some of the blue chip counters,” said Dimantha Mathew, head of research at First Capital Holdings.

“Overall investor interest is very low and it’s a very weak market with most of the broker community also on holiday.”

Shares in conglomerate John Keells Holdings Plc gained 1.1 percent, while Sri Lanka Telecom Plc ended 4.1 percent higher and Hatton National Bank Plc rose 0.2 percent.

Turnover stood at 153.8 million rupees ($1.01 million), below this year’s daily average of 923.2 million rupees.

Foreign investors net sold 4.1 million rupees worth of shares on Tuesday, but they have net bought 18.4 billion rupees worth equities so far this year.

The currency and stock markets were closed on Monday for Christmas. ($1 = 152.6000 Sri Lankan rupees) (Reporting by Ranga Sirilal; Editing by Biju Dwarakanath)

 

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 providing a full range of financial advisory and services. The Company’s research deliver heightened perspective in fundamental research aiding Share Market Investment in Sri Lanka. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis. With fundamental research coverage of 62 listed securities (reflecting approximately 65% market capitalization) across 15 sectors in Share Market Investment in Sri Lanka.

Central Bank expected to keep key rates unchanged: First Capital

Author LBO
Posted on | Economy, Featured, Forex, Policy

June 21, 2017 (LBO) – The Central Bank of Sri Lanka is expected to keep key interest rates unchanged in its monthly monetary policy announcement on Friday, with slower first quarter growth and a deceleration in inflation contributing to the decision, First Capital Research said in a pre-policy research note.

GDP growth for the first quarter was slower than expected, growing 3.8 percent year-on-year, with the agriculture sector decreasing 3.2 percent year-on-year due to drought.

“We believe inflation will be under control over the next 2-3 months while there could be some upward pressure towards September and beyond with the floods in May 2017 affecting the supply in the current growing season. As a result there could be possible supply side shortages towards September and beyond.”

CCPI based headline inflation, decelerated on a YOY basis to 6.0% in May 2017 from 6.9% in April 2017, and CCPI based core inflation also decelerated to 5.2% in May 2017 from 6.8% in April 2017.

Sri Lanka’s forex reserves rose to USD 6.8Bn in May 2017 from USD 5.0Bn in April, helped by a 1.5 billion dollar sovereign bond sale, 450 million dollar syndicated loan and dollar purchases by the central bank.

“Foreign Reserves are now at comfortable levels,” the note said.

Commenting on private sector credit growth, FC Research expects that the growth in private credit to descend towards around 18% to 20% from the current level of over 20%.

“In spite of a high private sector credit figure in March 2017 we believe the usual credit slowness in the month of April will keep overall credit under check.”

During the last one-and half months the central bank also bought down its holding in Government Securities from LKR 300Bn to below LKR200Bn as at 19th June 2017.

First Capital Research said there was a 85 percent probability rates would remain unchanged, and a 15 percent probability of a 25 basis point rate hike.

The Press Release on Monetary Policy Review is expected on Friday, 23 June at 7.30 am.

 

POLL: Sri Lanka cbank seen keeping rates steady as growth slows

    * Thirteen out of 14 analysts predict steady rates
    * Full-year growth expected to slow on adverse weather
    * Tight fiscal, monetary policies also weigh on growth
    * Policy announcement due on Friday, June 23 at 0200 GMT

    COLOMBO, June 21 Sri Lanka's central bank is
expected to keep its key interest rates steady at more than
three-year highs at a policy meeting on Friday, a Reuters poll
showed, to boost faltering growth hit by adverse weather.
    Thirteen out of 14 economists surveyed predicted the central
bank would keep its standing deposit facility rate (SDFR) and
standing lending facility rate (SLFR) unchanged at 7.25 percent
and 8.75 percent, respectively.
    The lone outlier expected a 25-basis-point hike in both
rates.
    All 14 economists predicted the statutory reserve ratio
(SRR) to stay at 7.50 percent.
    "With the slower-than-expected first-quarter growth, the
central bank would keep the rates steady," said Dimantha Mathew,
head of research, First Capital Holdings PLC.
    "With improvement in the reserves, inflation under control,
and slowing private sector credit growth, they (the central
bank) might see the current conditions to be appropriate to hold
the rates steady."
    The $81 billion economy grew 3.8 percent in the quarter
ended March 2017 from a year earlier, slowing from the 5.3
percent growth in the previous quarter and marking its weakest
period since the second quarter last year.             
    The full-year growth is expected to be hit by extreme
weather, after the island nation faced its worst drought in 40
years in the first quarter and heavy rains resulting in floods
last month, the country's worst in 14 years.
    Sri Lanka's 2017 growth rate is likely to be significantly
lower than the official forecast, private economists have said.
            
    The central bank tightened monetary policy four times since
December 2015 through March this year to fend off pressure on
the fragile rupee and curb stubbornly high credit growth that
had pushed up inflation.
    Analysts said previous policy tightening cooled inflation
and private sector credit growth in the last two months. 
    Private sector credit grew 20.4 percent in March from a year
earlier, up from February's 21 percent. It has eased from a near
four-year high of 28.5 percent hit in July.
    Consumer prices rose 6.0 percent in May from a year earlier,
slowing from the previous month's 6.9 percent.               
    Policy tightening also dragged on the economy, which grew at
a slower 4.4 percent annual pace in 2016 compared with the 4.8
percent growth a year earlier. 
    The Sri Lankan rupee          fell 3.9 percent in 2016 and
has eased around 2.3 percent so far this year, pressured by
dollar demand from importers and withdrawal of foreign investors
from government securities in the first three months.
    The central bank has quit defending the rupee after it
missed an end-December reserve target set by the International
Monetary Fund for a $1.5 billion loan. 
    
Following are poll forecasts for rates on Friday: 
                    SDFR         SLFR        SRR
                  (in pct)    (in pct)     (in pct)    
Median              7.25         8.75       7.50
Average             7.27         8.77       7.50  
Minimum             7.25         8.75       7.50
Maximum             7.50         9.00       7.50   
Rates in May        7.25         8.75       7.50
No. of economists     14           14         14

 (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)