Foreign investors pick up more than Rs. 1.6 billion worth shares since Easter carnage

By Hiran H.Senewiratne

Foreign investors plying the CSE have purchased more than Rs. 1.6 billion worth of shares after the  Easter Sunday carnage. The reason being that most local investors have over reacted with panic to the current situation and sold below market rates, a top CSE official said.

"Due to the current situation local investors are overreacting with panic and are selling their stocks at a lower price and some sectors are selling below book value, CSE- Head of Market Development Niroshan Wijesundere told The Island Financial Review.

He said that from April 22 to May 10 more than Rs. 1.6 billion worth of shares belonging to local investors have been purchased by foreign investors. "Because locals are over-reacting and selling at a lower price, this is a  tremendous buying opportunity for any investor, Wijesundere said.

"Sri Lanka is a frontier market and it could bounce back with the passage of time but the most important matter to be concerned about is that some of the important sectors are selling below book value, and most foreign investors are picking up this opportunity, he said. Yesterday  shares fell for the eighth  straight day, closing at their lowest in six-and-a-half years and the rupee slipped for a second day as the Easter bombings drove off investors. Amid this development, both indices moved downwards and the CSE recorded a small turnover of Rs. 179.5 million. All Share Price Index was down by 14.49 points and S and P SL20 by 0.35 points.

During the day, companies that mainly contributed from the retail market to the day's turnover were: Cargills Rs. 49.4 million (251,000 shares traded), JKH Rs. 48.6 million (357,000 shares traded), Seylan Bank (Non Voting ) Rs. 18.9 million (629,000 shares traded), East West Properties Rs. 18 million (990,000 shares traded) and Sampath Bank Rs. 6.1 million (41,200 shares traded). During the day 6.1 million share volume changed hands in 3041 transactions.  Sri Lanka’s economic growth is expected to slump to its lowest in nearly two decades this year. Tourism, foreign investment and overall business activity have all dropped after the  Easter Sunday bombings. Investigators have dismantled a major part of the terror network linked to the bombings.

The benchmark stock index ended 0.46 percent weaker than on the previous day (last Friday) at 5,327.68, its lowest close since Dec. 5, 2012.  Turnover was  Rs. 179.5 million,  lower than this year’s daily average of around Rs. 565 million. Last year’s daily average was Rs. 834 million.Sri Lanka rupee opened steady around 176.30/40 Monday while bond yields were edging lower dealers said, amid weak private credit, while overnight rates were hitting a floor set by repo auctions.

In May there had been some sales of rupee bonds by foreign investors, but private credit is weak. On Friday the rupee weakened.

Meanwhile, JKSB adds -

ASPI: 5,307.20 (-20.48 pts; -0.38%); Val T/O: Rs. 179mn (US$1.0mn); Vol T/O: 6.1mn; Trades: 3,041

Advance/decline ratio: 66/94; Top gainer: CIC.X (+7.28%) ; Top loser: BLUE.N (-25.00%)


*The ASPI ended lower amid weak turnover levels with most sectors witnessing declines. CARG, JKH, and SEYB.X led market activity with trading in CARG amounting to 28% of total turnover.

*Beverage, Food & Tobacco was the most actively traded sector (-0.43%)

*Power & Energy was the best performing sector (+0.77%), supported by gains on VLL.N (+2.33%)

*Information Technology was the worst performing sector (-2.36%), dragged down by declines on ECL.N (-2.56%)

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