Stock Market

Bartleet’s Weekly Market Commentary

The market as expected showed signs of recovery with renewed investor interest on the bourse resulting in most blue chips appreciating considerably during the week. Both indices gained gradually Monday through Friday except for Wednesday’s stagnation. The ASI which opened the week on 543 gained 2.79% while the MPI touched 900 levels after a lapse of around 10 weeks to close at 92 1.1, up 4.5% WoW.

The week saw healthy levels of turnover averaging around Rs. 93Mn, up 42.4% WoW. Friday’s exceptionally high turnover of Rs. 747.98Mn was on account of CTC selling out its controlling stake in CTC Eagle. The sale of its 63.8% stake to reflect the restructuring of BAT Industries took place at a price of Rs. 44.25 per share generating a revenue of Rs. 565Mn for the company. Though the sale was communicated previously, with the deal going through, CTC appreciated Rs. 4.50 as a result of the increase in shareholder wealth and anticipation of a dividend announcement.

Among the stocks that appreciated significantly were SPEN, JKH, COMB, GRAN and CTC. With levels of activity expected to strengthen in the next couple of weeks, we reiterate our recommendation on fundamentally sound stocks. We also advice our investors to have a closer look at Hayleys, which we feel is trading at a discount to the sector.

As expected the interim results of the Regional Plantation Companies depicted a significant drop YoY owing to weak commodity prices. However, some of these companies such as Maskeliya, Kelani Valley, Madulsima and Balangoda Plantations have recorded a marginal profit for the quarter despite both tea and rubber prices reaching bottom levels. Tea production during the first quarter surged 24.35% on the back of favourable weather patterns that prevailed throughout the period. The significant feature of this growth was that production in all three elevations i.e. high, medium and low has increased by 26.4%, 15.6% and 26.8% respectively.

Japanese stocks made a quite finish to the week Friday as corporate earnings, a weak yen and renewed hopes of an economic aid package dominated investor thinking. Fears that interest rates will have to rise again dominated trading in Hong Kong, leading the major stocks lower Asia’s lesser markets put in a mixed performance, although most of them traded in a very narrow range. In a broader Honk Kong market, declines led advances 458 issues to 139 and turnover was a thin HK$ 5.65Bn down from HK$ 7.27Bn Thursday. Singapore stocks had a choppy session with over night weakness on Nasdaq hurting sentiment among electronic stocks in early trade. They recovered later in the session, however US markets were weakened by a late bout of selling. Of the other Asian markets only the Philippines made any ground Friday. The Composite index gained 0.33% to 2377.13. Stocks in Kuala Lumpur eased 4.84 points to 774.78, while Thailand’s Set Index dipped 0.5% to 477.12. Taiwan couldn’t escape the downtrend either, although losses on the weighted index were mild.