Monday, January 28, 2013

Franklin Templeton buys Rs. 1 b worth of COMBank shares

Locals step into equities as most foreign funds take profit

By Nisthar Cassim

 JP Morgan Franklin Templeton Investment Funds is estimated to have invested Rs. 1 billion in buying into private sector industry giant, Commercial Bank shares by last week.

 Commercial Bank last week saw nearly 15 million of its shares or 2% stake traded for Rs. 1.5 billion and Daily FT learns Franklin Templeton figured as the biggest foreign buyer as several other relatively older foreign funds exited from the stock booking profit.

On Tuesday it bought slightly over Rs. 400 million worth of Commercial Bank shares whilst Wednesday it collected a further Rs. 381 million shares. 

 In recent times, Franklin Templeton has been collecting Commercial Bank shares including a block worth Rs. 217 million in the previous week.

 Interest by Franklin Templeton is being viewed as a major boost to the Colombo Bourse, as it joins a set of foreign funds which have renewed interest on Lankan equities. Others include Deutsche Bank AG London and more recently Citigroup.

 Buying by Franklin Templeton also resulted in net reduction in foreign holding at Commercial Bank being limited to 6.5 million shares, though the bulk of the selling was by foreign funds such as SBI Ven Holdings and Janus.

 Several local institutions as well as high net worth investors too were zeroing on Commercial Bank last week.

 For example, Ravi Thambiayah-fame Renuka Hotels and connected parties bought Rs. 200 million worth of Commercial Bank shares, whilst the biggest player in the equity market, the Captains, were on the buying side too.

 Savings giant NSB too has been collecting Commercial Bank shares in addition to a host of insurance and investment funds.

 The market, which has provided 4% return so far in 2013, last week saw net foreign outflow of nearly Rs. 1 billion as foreign funds were either booking profit or reallocating their Sri Lankan portfolio.

 Nevertheless, several new funds are active on select stocks. For example, Mathews Asia Growth Fund was believed to have been the major buyer of Sampath Bank and LOLC, two stocks which saw net increase in foreign holdings according to Acuity Stockbrokers. Sampath saw a 0.64 million share-increase in net foreign holdings worth Rs. 137 million whilst LOLC saw 0.83 million shares worth Rs. 58.6 million.

 In both counters locals were the sellers. Nestlé, which is a favourite of foreigners, drew Rs. 116 million worth net buying last week. Premier blue chip JKH, the most popular among foreigners, was relatively subdued with only 0.15 million shares of net buying. Other stocks which saw an increase in net foreign holding were Distilleries, Chevron, Dockyard, Hotel Sigiriya, and Dialog.

 A host of local insurance and investment funds including unit trust were also active on banking sector stocks and their basket comprised Commercial Bank, DFCC Bank, and NDB. Insurance funds were also active collecting available quantities of Carson Cumberbatch and Aitken Spence Hotels.
 Nippon Coke and Engineering of Japan sold Rs. 30 million shares of Tokyo Cement with major local shareholder Gnanam-family linked South Asian Investments buying the block, as the case has been in recent weeks.

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