Retail interest in CSE expected to revive this week

Retail interest in the Colombo stock market is expected to revive this week as the CSE upgrades its trading system on Monday, Acuity Stockbrokers said in a market report.

 It noted that government’s recent sale of large blue chip stakes to foreign investors failed to ease pressure on the rupee with the rupee hitting a new low against the US dollar on the back of import demand.

The Central Bank (CB) however hastened to reassure markets saying that it expects further foreign exchange into the country in addition to the recent inflows via equities, capitalizing by private commercial banks and investments in Sri Lanka investment bonds and treasuries, the report further said.

"The CB added that this increase in foreign exchange inflows, along with a deceleration of import demand should stabilize the rupee in coming weeks," it added.

The Acuity reported noted that markets slumped last week as net foreign inflows which bolstered volumes the previous week and on Monday dwindled over the week.

By Friday however, markets won back some of its mid-week losses with the ASPI picking up 72 points and volumes hovering just below Rs.1 billion.

The All Share Price Index closed the week down 26.72 points (0.49%) from a week earlier while the MPI was down 16.39 points (0.34%) with Aitken Spence, JKH and Commercial Bank dominating turnover.

These three counters together accounted for 59.18% of the total turnover with Spence alone contributing 43.98% of the week’s total turnover value following he EPF sale of 5% stake of the company to a foreign buyer.

Nevertheless, the week’s turnover value was down 70.3% to Rs.5.42 billion from 18.22 billion the previous week.

Acuity said that market capitalization too had declined 0.48% last week to Rs.1,988.3 billion.

Foreign investors remained net buyers posting a net buying position of Rs.2.39 billion last week against the previous week’s net buying position of Rs.14.93 billion. The total inflow was Rs.3.33 billion was mostly accounted for by Aitken Spence. Meanwhile, total foreign sales increased significantly by over 100% to Rs.937.3 million from Rs.283.1 billion a week earlier.

John Keells Stockbrokers (JKSB) also noted that the market had declined during the week before rebounding sharply on Friday with activity driven by large cap diversified counters and Commercial Bank. Foreign purchases of Aitken Spence resulted in a net foreign inflow of Rs.2.4 billion for the week, JKSB said.

source - www.island.lk