      Business Editor : Eriq Dewanarayana
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Business Editor : Eriq Dewanarayana
|
Stock Market Weekly
Desert Fox hurts the markets Dec. 18, 1998The unexpected Operation Desert Fox did create some uncertainty in the International markets. It may take time to cool off the tension in the Middle East. The short-term impact would be on oil, money and international stock markets. Sri Lanka is unlikely get affected but more than 100,000 Sri Lankans work around the danger zone.
The Colombo bourse initially responded to the panic sellers but did not lose too much. The week ended on a weak note with the All Share closing at 555, 2 points below the previous week, while the Sensitive Index gained 9 points for the week. Lack of institutional activity lead to moderate turnover levels.
Foreign activity registered below average participation with two days recording below 14%. Lately on Thursday, European markets and the Dow Jones recorded gains as well as some of the Far Eastern markets. Being the end of the year, institutions may take a back seat while, as usual, most retail investors may gradually enter the market.
The weeks ahead will witness increased activities in the NWPC election scene and it will be crucial for the government as well as for the opposition. Though the outcome has little impact on the market, it is interesting to note the peoples’ perception about the economy as a whole since it has a medium term effect on government policy.
Again rapid movement in the exchange rate is visible with the US $ touching Rs. 68.29 on Friday. Within this week, the SLR has depreciated by 28 cents. While most exporters are clue-less on the direction of the rupee, it is still projected that the US $ may reach Rs. 70 within the month of January 1999.
The Banking sector is projected to record an average earnings growth in excess of 15% for the year while manufacturing will face mixed results. The Hotels & Travel sector may experience a partial recovery in the coming months while plantations continue to be in an uncertain area with unclear trends in tea and rubber prices.
The upcoming elections and tension in the Middle East may hold the market fluctuations within a narrow range, though the previous forecast was for the Index to touch 600 by the end of 1998. Within this uncertain climate, our recommendation is to buy on weakness and the core picks include Dockyard, JKH, Sampath Bank, Tokyo Cement, Grain Elevators and DFCC. Speculators should not miss Asian Hotels and Vanik while Asia Capital appears to be well worth as a long term investment.
MMBLGroup Research
For MMBL Phillip Securities Limited
The Head Office of the Sri Lanka Standards Institution (SLSI) has been shifted to its own building at No. 17 Victoria Place (off Elvitigala Mawatha) Colombo 8 with effect from 19 December this year. The Institution has been housed in premises owned by private parties for a period of over 33 years. This move will save considerable expenditure incurred annually as rent and facilitate better co-ordination and supervision of different divisions. The first phase of the Building Project was completed in 1993 and the Laboratory Services Division was shifted to the new location in the same year. The third and the final phase presently under construction will be completed in March 2000 and will provide accommodation to the rest of the divisions presently located in Colombo 04 and Colombo 07.
Absence of a central location for the Institution has inconvenienced the business community particularly those in the Imports/Exports trade for a long time. SLSI is taking steps to provide all services under one roof from year 2000. The new telephone numbers are: 671567 to 67572 (05 lines) and the fax number is 671579.
