Sri Lanka Stock Picks

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Saturday, January 1, 2011

Sri Lanka bourse performs Asia's best in 2010

COLOMBO: Sri Lanka's stock market edged up 0.3 per cent on Friday to end the year as Asia's best performer for second year in a row hinging on post-war economic optimism, while the rupee closed flat on thin volumes of trade.

The island's main share index rose 21.74 points to 6,635.87. It has fallen 7.9 per cent since it hit an all-time high of 7,207.75 on Oct. 4 on year-end settlements, profit taking, and liquidity shortage.

Asia's best performer in 2010 has surged 96 per cent, with Indonesia that rose a 46.1 per cent becoming a distant second. In 2009, it was the best performer with 125 per cent.

Despite being expensive in valuation, retail investors and government funds mainly boosted the market this year on hopes of rapid economic expansion after the end of the 25-year war in May last year.

"We will not see a similar surge next year, but we will see high activities with over 60 firms in line for listing," said Danushka Samarasinghe , director at TKS Securities . "We expect 60 per cent rise with better earnings in 2011."

The year saw a net foreign outflow of 26.4 billion rupees from the bourse, more than twice of last year's net selling of 11.4 billion rupees. On Friday, offshore investors sold a net 15.9 million rupees.

The daily average turnover for 2010 was at a record 2.4 billion rupees, more than four times higher than the previous all-time high of last year's 593.6 million rupees. Friday's turnover was 1.3 billion rupees ($11.8 million).

The bourse is trading at a forward price-to-earnings (P/E) ratio of 17.5, the highest among emerging markets, compared with 13.1 of Asian markets and 12.1 of global emerging markets, Thomson Reuters StarMine data showed.

The CSE's 14-day relative strength index is at 62, towards overbought or the upper neutral limit of 70.

On Friday, 48 million shares changed hands, as against five- and 30-day average of 48.7 million and 54.1 million, respectively. The 90-day average volume is 63.7 million. In 2009, daily average volume was 19.8 million.

Sri Lanka's rupee ended flat at 110.94/96 a dollar in sluggish trade, currency dealers said. It has risen 3.06 per cent so far this year.

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