Friday, July 22, 2011

Bourse crashes to lowest level

The Colombo stock market yesterday sank to its lowest level so far this year, relegating the benchmark All Share Index to negative return territory as investors continue to lose heart despite highly favourable external developments.

A drop in market capitalisation to the tune of Rs. 30 billion yesterday brought the total loss of value to the week to Rs. 63 billion. The ASPI dipped by 1.25% forcing it to languish with a 0.56% negative return year to date.

In comparison to the mid-February peak of Rs. 2,600 billion market capitalisation, the bourse has seen Rs. 259 billion in value wiped off as of yesterday.

The ASI was offering a 17.7% year to date return as at 14 February.

Stock market investors appeared to be unimpressed by the fact that the Government’s $ 1 billion bond drew massive oversubscription following an upgrade in rating by leading agencies. The improved economic growth outlook, low interest rate scenario and impressive corporate earnings have failed to boost investor sentiments as well.

Analysts blamed the crash on over-regulation by the SEC, especially in terms of credit as well as it and the CSE approving too many IPOs, which have sucked liquidity on top of rights issues and private placements.

However, others noted that despite attractive pricing at present, the mysterious absence of institutional investors in the market had aggravated the downfall. There is a section in the market who predicts prices to fall further from a highly-overvalued scenario early in the year.

“Indices gained marginally during early trading but gradually dipped down to close in red. Prices dropped across the board with low activity. Month end selling pressure coupled with short term profit taking seem to weigh on the indices,” NDB Stockbrokers said.

“Market continued trending down getting ready for the month-end clearing,” added Arrenga Capital.
It said John Keells Holdings spearheaded the day’s performance with a 14.4% contribution to the turnover. Institutional participation continued in John Keells Holdings with the counter registering two crossings counting to 336k shares being transacted at Rs. 200.

Mixed investor interest was evident in Softlogic Holdings, driving the counter to register a total of 3.3 m shares being transacted for the day. Retailers were seen active in Panasian Power, Orient Garments and Vallibel One. High net worth investor presence was evident in Brown & Company.

Renewed investor participation was evident in Piramal Glass with the counter registering an intra-day high of Rs. 9.40 in the initial hours of trading.

Prices of Nanda Investments and Finance and Hotel Sigiriya continued to appreciate registering a 50% and 12.1% gain respectively.

Following the release of 1QFY12 performance of LB Finance, morning sprint on the counter led it to touch an intra-day high of Rs. 175, despite closing low at Rs. 166.6.

Furthermore, Chevron Lubricants released their 1H2011 quarterly earnings registering a 6% YoY growth to Rs. 835.7 m during 1H2011 whilst the quarter’s earnings improved by a marginal 2% YoY to Rs. 422.6 m.

NDB said John Keells Holdings was the main contributor to the market turnover with two crossings of 336,134 shares at Rs. 200. The share price decreased by Rs. 2.70 (1.33%) and closed at Rs. 199.90.

Banks, Finance & Insurance sector also contributed significantly to the market turnover. The sector index decreased 1.60%. Profit taking was witnessed in Softlogic Holdings, Expolanka Holdings, Orient Garments, Brown & Company and Panasian Power while renewed interest was witnessed in Hayleys. Hotel Sigiriya continued to attract investors as the share price moved up by Rs. 10.20 (12.19%) and closed at Rs. 81.90.

Lanka Securities said foreign participation accounted for 12% of the total market activity. At the end of the day foreign investors ended as net sellers with a net outflow of Rs. 79.8 m.

source - www.ft.lk

No comments: