Monday, December 31, 2012

ASPI hits two month high

Markets closed the last trading week of 2012 on a relatively positive note, with the main ASPI hitting a two month high on Friday to close at 5607.13 (up 90.64 points W-o-W). The MPI and S&P SL 20 too recorded marginal gains with the MPI increasing 1.50% to close the week at 5120.17 points while the S&P SL 20 Index increased 1.15% to close at 3068.99 points Turnover levels which were understandably low over the holiday-shortened week were driven largely by crossings in select counters; off-market transactions in JKH, SAMP and BIL accounted for approximately 78.0% of the week's total turnover. JKH accounted for the highest turnover value for the week, recording a value of LKR 781.01mn to represent 61.29% of total market turnover. Browns Investments contributed 8.48% of total turnover as it contributed LKR 108.01mn while Sampath Bank accounted for 7.47% of the market with a contribution of LKR 95.22mn.

Total turnover value for the week amounted to LKR 1.27bn, a drop of 76.21% compared to last week's total turnover of LKR 5.36bn. The daily average turnover value for the week meanwhile amounted to LKR 424.77mn, a 60.35% decline compared to last week's LKR 1.07bn. Market Capitalization increased 1.63% (or LKR 34.47bn) to LKR 2153.94bn from last week's value of LKR 2119.47bn. On a sectoral level, the Diversified sector was the highest contributor to the week's turnover value which, with the help of JKH accounted for 71.46% or LKR 910.64mn. The Bank & Finance sector followed suit with a contribution of 13.56% or LKR 172.83mn while the Hotels and Travel sector accounted for LKR 34.92mn or 2.74% of the market's total turnover.

Terms of volume too, the Diversified sector dominated, accounting for 56.63% (or 27.16mn shares) of the market's total trades for the week.

The Bank & Finance sector contributed 12.33% of the total traded volume as 5.91mn shares were traded while 3.69mn shares in the IT sector changed hands, consequently accounting for 7.68% of the week's turnover volume. The highest price gainer for the week was Miramar Beach Hotel which gained 21.49% to close the week at LKR 97.80 compared to last week's close of LKR 80.50.

Kalamazoo followed suit, gaining 18.18% (W-o-W) to close at LKR 2600.00 while Singalanka closed at LKR 103.00, up 16.91% W-o-W. Also amongst the price gainers were Lake House Printers and Gestetner of Ceylon Plc with gains of 16.67% and 15.49%, respectively. Namunukula Plantations was the highest price loser for the week, declining 10.95% (W-o-W) to LKR 73.20 relative to last week's close of LKR 82.20. Arpico Finance declined 10.90% to close at LKR 69.50 while Abans Finance Plc dropped 7.77% over the week to close at LKR 35.60. Foreign investors closed the week in a net buying position once again this week albeit lower than that of last week. Net foreign inflows for the week totaled LKR 0.74bn relative to last week's LKR 1.19bn, representing a W-o-W decline of 37.69%, as average daily net inflows amounted to LKR 247.34mn compared to LKR 238.16mn last week.

Total foreign purchases decreased 63.76% (W-o-W) to LKR 0.81bn (relative to last week's total of LKR 2.24bn) while total foreign sales decreased 93.40% (W-o-W) to LKR 0.07bn (from last week's total of LKR 1.05bn). In terms of both volume and value, Odel and JKH led foreign purchases; Free Lanka meanwhile led sales in terms of volume while Environmental Resources Warrant 3 led foreign sales in terms of value.

Point of view

Although negative sentiment has weighed markets down through most of 2012, total returns on the broad Index have shown a marginal improvement since last year (-7.7% vs. -8.5% in 2011).

Corporate earnings for the trailing 12-months to September 2012 have in fact improved, rising approximately 3.0% since September 2011. Market PERs have consequently decreased, with the PER1 at end-December at 11.85x relative to 13.47x in the same period last year. Foreign inflows to the bourse meanwhile have remained consistently buoyant through 2012, hitting an all-time2 Y-T-D high of LKR 38.58bn, a stark contrast to the net foreign outflows experienced over the last 3 years.

With interest rates having declined 250bps since its peak in September (rates rose from 8.71% in January to 13.82% in September and is currently 11.32%), prospects for equities in 2013 are likely to be strong, particularly in the context that slower GDP growth will likely imply lower rates.

Markets are likely to remain fundamentals-driven in 2013 as corporates continue to consolidate their post-war boom position.

source -

No comments: