The initial signs of a return of bulls boosting value of the Colombo stock market by Rs. 62 billion in the past two market days have renewed investor hopes for better times ahead.
The bearish market until Thursday had lost about 53% since the February peak but last two days a spurt of buying mood saw market capitalisation grow by Rs. 62 billion to finish on Friday at Rs. 2.475 trillion from Rs. 2.413 trillion on 30 March.
The late rally also helped the benchmark All Share Index (ASI) to move back to over 10% year to date return and finish at 11% as opposed to around 8% mid-week. Market peaked to a year to date return of over 17% in mid-February.
Most analysts said return of foreign investor interest ignited the bourse on Thursday. “With the market having corrected itself, foreigners are seeing fresh buying opportunities,” they said. This view is reflected by the fact there had been two consecutive days of net foreign inflow. However, this week will be crucial to confirm of a rebound in foreign interest.
As reported exclusively in the 24 March issue of the Daily FT, there had been renewed interest on Sri Lanka at the Credit Suisse 14th Asian Investment Conference, which saw a record attendance of over 2,000 fund managers. The five Lankan companies JKH, Dialog, Commercial Bank, HNB and Sampath Bank had over 50 one-to-one meetings with fund managers according to Credit Suisse AG Asia Pacific Chief Operating Officer and Managing Director Dumith Fernando.
In fact JKH saw its share price gain by Rs. 10 on Friday whilst Sampath Bank saw foreign buying.
As reflected by low turnover analysts said that there weren’t willing sellers despite renewed buying interests by both foreigners and locals. Another factor is clearance of debt by the first deadline of 31 March, which has spurred a fresh round of buying whilst anticipated improved earnings by companies with 31 March financial year have strengthened investor sentiments.
Last week ASPI and MPI gained 1.89% and 2.73% respectively for the week.
However, NDB Stockbrokers said “relatively low turnover levels suggest that it may be challenging to continue the momentum” this week.
However Acuity Stockbrokers said, “Backed by the favourable macroeconomic environment and the start of a new financial year for most corporates, we expect buying interest in fundamentally sound stocks, mid caps to pick up during the weeks ahead.”
source - www.ft.lk
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