      Business Editor : Eriq Dewanarayana
Weak Market is Likely to Edge
Lower Plantation Stocks Weather the sell-off With Gusto Despite efforts by interested parties to knock down the plantation company share prices with adverse predictions regarding the fall out from the Russian currency/ economic crisis affecting prices and demand for tea, these shares held their ground remarkably well. East Asian Crisis Worseans Continuous fall of the Yen despite threats of intervention is sending shivers down the spines of those in the West who will most certainly have to deal with a barrage of cheap goods from the East flooding their markets and threatening the continuation of the current boom there. However the gloom in the Far East shall prevent any large scale flow of funds towards the region and South Asian markets too may suffer as a consequence. Russian Crisis Makes Things Worse Russian Ruble crises took a turn for the worse forcing Boris Yeltsin to sack his young Prime Minister & his entire cabinet. Trading in Rubles was stopped when it fell to 14 Rubles to a US Dollar, well below the floor of 9.5 Rubles/ US $ fixed by the outgoing administration. Despite the suspension in inter-bank trading in Rubles it was changing hands in the black-market at around 15 Rubles/US $. Collapse of the Ruble is bad news for Western economies who were the main beneficiaries from the changeover from communism to open market system in the former Soviet Union and its satellites. All the lucrative contracts connected with the chantgeover process went to the West. Now Russia is likely to default on most of these contractual commitments and Western powers are likely to feel the pinch very soon. Market Outlook The sharp fall on Friday indicate that the market may try the 500 level again. A fall below 500 is likely to affect the mood of the market players most negatively and cause many to panic and dump their holdings in a hurry. Foreigners who couldn't get out of the market earlier may make use of any pull back as the one we encountered during the last couple of days to leave the market to get in later. Next Technical Support Lies Well Below 500 Technical support for the market, in the event of a breach through the critical 500 level, lie far below the current level and the fall to that level will be swift and unnerving. However considering the fact that the market P/E will be around 8.5 on historical earnings when the level of 500 on the ASI is reached shall make it a good support. However with no assistance coming from international players even this support is under siege. Appearance of 400s on the ASI and 600s on the SI shall make many to panic. Market Where New Millionaires are Made and Some Existing Tycoons are Ruined While market crashes may ruin some very rich tycoons and make them very poor indeed, history has proved that these crashes are also the breeding ground from which many millionaires have emerged. Those who are imprudent enough to play the falling market with borrowed funds (i.e. margin trading) usually lose their shirts (and other apparel as well) in such a crash. But those with an entrepreneurial spirit and smart market sense to buy after everybody leaves the market in disgust generally bloom as the markets turnaround. Just as anything that goes up has to come down eventually every crashed market will sooner or later move up and try the record highs once more. Market Statistics The advancers to decliners ratio for the week was 0.49:1. It fluctuated during the week from a low of 0.22:1 to a high of 1.42:1 Foreign activity for the week accounted for 31% of the turnover. Net foreign sales amounted to Rs. 80.71m. Heavily Traded Stocks Eden Hotels (4,330,200), Sampath (1,182,000), Celinco Seylan (1,100,900), JKH (934,600), Balangoda (738,900), Korea Ceylon (603,200), Udapussellawa (563,400), Dockyard (453,400), Asia Capital (360,300) Distilleries (307,300). Gainers: Stocks that moved up significantly during the week were: Losers: Stocks that moved down significantly during the week were: Political Outlook Crisis in Russia, crisis in Japan, crisis in Indonesia, crisis in Malaysia; the list is ever growing. The U.S. market which weathered the Asian economic crisis, Yen plunge, Monica Lewinsky scandal and Bin Laden's attack on US embassies in Kenya and Tanzania with gusto finally succumbed to pressure from the Russian currency crisis. The Dow's fall on Thursday would make even the most stubbornly optimistic 'Bulls' to admit that a 'Bear' market has started in New York. The Russian Ruble which was under pressure for some time was kept artificially propped up by keeping interest rates absurdly high. The high interest rates naturally precipitated a recession that necessitated the lowering of the Ruble peg. The fears of the collapsing Ruble triggering widespread defaults by Russian borrowers have shaken the Western lenders to the core. Moreover the imminent fall of Yeltzin and the probable rise of Zyuganov and his Communist Party is worrying the West. Economic Outlook Economic turmoil in Russia and elsewhere will only have a marginal influence on our tea and rubber markets. Bear markets in the Far East started last year and those in the West have just started. On the other hand the bear market in Sri Lanka, which started in 1994 is now losing steam and nearing the bottom. Therefore there is the likelihood that at least a small fraction of the funds withdrawn from the falling markets elsewhere will find its way to Sri lanka. Though this may not happen immediately the buying momentum is likely to pick up in the coming months. Treasury Bill Auction - The Treasury Bill auction held on Wednesday 26th August 1998 was over-subscribed with bids amounting to Rs. 4,939m received. The government offered treasury bills worth Rs. 2,775m at the auction. The weighted average yield for three-month bills increased by 1 basis point to 12.51%. For six month bills the rate increased by 1 basis point to 12.91% & for twelve-month bills it remained unchanged at 12.99%. Significant changes scheduled to take place during the week is occupation in Leo by Venus and Mercury on 2nd and 4th respectively and conjoined with Sun and Rahu who are already in that house. This position will help to make some progress in the market temporarily and some such good effects would come next week. However, as a result of weak influence of Mars and Saturn the sectors governed by them will not produce any favourable effect. Effect on the Market: According to the above position Banking, Finance and Insurance sectors will show progress but that too unlikely to be strong. Beverage, Food, Tobacco, Diversified and Trading sectors also will be on the up trend but, manufacturing, hotels and land and property sectors may not be so. The position with regard to plantations appear to be adverse according to the existing movements. - Sugathadasa Jayasekera. SLCBCC Seminar on 3rd Sept. 1998 The Sri Lanka China Business Co-operation Council and the National Chamber of Commerce along with the Commercial Counsellor's office of the Chinese Embassy in Colombo will be holding a seminar on the above mentioned topic at the Hotel Galadari on September 3rd 1998. The seminar will lay particular emphasis on identifying opportunities in the Chinese market for local products and also give an insight into promoting joint investments with China. The seminar therefore provides an ideal opportunity for Exporters, Importers and Company Directors in addition to those who wish to invest in joint ventures with Chinese collaboration. The Sri Lanka-China Business Co-operation Council has in the recent past endeavoured to provide an insight into the vast potential for trade with China. The Council feels that though Chinese imports have expanded considerably a proper direction and guidance is necessary for local exporters to identify openings for them in the Chinese market. This seminar is yet another effort of the council towards promoting exports to China in particular. The seminar is due to be addressed by Kingsley Wickrema-ratne, Minister of Internal and International Commerce and Food who will be the chief guest, Mr. T. Woutersz, Secretary, Foreign Affairs and Mr. Armyne Wirasinha President of the National Chamber of Commerce. Experts such as Mr. Thilan Wijesingha, Chairman BOI, Mr. G. L. Hewawasam Director General EDB, Mr. Lui Shiwei Economic and Commercial Counsellor Chinese Embassy in addition to Mr. Rohan Perera Chairman of a company which has two decades of trading experience with China will address the seminar on specific areas of Trade and Investments. The cost of Participation is Rs. 1250 for SLCBCC Members and Rs. 1350 for non-members which includes lunch and course material. This half day seminar should prove to be a worthwhile experience to all those who wish to conduct business with China. Those interested are requested to contact the National Chamber of Commerce at 450 D. R. Wijewardane Mawatha, Colombo 10. Tel. 689805, Fax 689596. Uni Walkers offers two-year warranty plus on Panasonic products Uni Walkers recently extended its existing warranty on Panasonic facsimiles, photocopiers, PABX systems, typewriters and computer printers to a period of two-years. This extended warranty offer reinforces the Company's confidence in the Panasonic brand they market and rewards customers for their confidence in the quality and reliability of the brand. Uni Walkers has been rated one of the key suppliers of electronic equipment in Sri Lanka. The company's link up with Matsushita Electric Co., Japan, one of the world's largest manufacturer of electronic equipment with overall net sales in excess of US $619 million annually, has provided the Sri Lankan consumer with the opportunity to purchase electronic equipment renowned the world over for superior technology and long-lasting performance. Matsushita Electric Co., manufactures internationally renowned brands such as National Panasonic and Technics, Today, National Panasonic and Technics are household names in the local market. This brand popularity can undoubtedly be attributed to the good corporate image of both manufacturer and distributor. Uni Walkers has a strong local customer base built on an efficient after sales service network. A diversified company with a solid infrastructure geared to fulfil their objectives in marketing, Matsushita Electric is a world leader in electronics, in development expertise, product competition and marketing. |
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