Stock Market Forbes ABN AMRO Business Roundup
For the trading week ended Friday 28th of May 1999
Market sentiments depressed
Hope for Tourism sector with steady increases in arrivals
Asian markets
Increase in interest ratesMarket sentiments depressed — The activity levels registered a significant decrease from last week, registering an average turnover of Rs. 34.4 Mn or a 84% decline from previous week. Excluding last weeks one off transaction of CTC Eagle the activity levels were still sharply lower by 54%. The market benchmark ASPI declined by 11.31 points to close at 546.79, whilst some bluechips took a considerable beating registering a 31.81 points decline to close at 889.29. This is despite a 24% appreciation of HNB due to a 2 for 3 Bonus Issue announced on Friday. Foreign activity mirrored overall market sentiments registering a 50% decline and a net outflow of Rs. 36.3 Mn. The increase of market indicators on Friday was mainly on the back of HNB with most counters registering declines.
Hope for Tourism sector with steady increases in arrivals — Arrivals seem to have gathered momentum given that January recorded a 19% growth, February 18%, March 27% and April a staggering 35%. We believe this to be a result of aggressive promotional campaigns carried out in the European markets in the latter half of last year coupled with the gradual recovery of the East Asian economies. We think this positive trend to continue during the year despite the normal seasonal dip witnessed in May-July.
A significant growth in influx from Western Europe is expected to be the main contributor to the growth in arrivals, with a growth rate above the overall average. This is good news for the Resort Groups given that most resorts have above 70% exposure to Western European Tourist segment. This should result in significant increase in contribution levels of the Resort Groups mainly dominated at present by key players; JKH and Aitken Spence Hotels Holdings.
Further the imminent rebound of East Asian economies have resulted in steadying of arrivals from Asia in the 1 Q99. If continued this should bring some respite to the city hotels around Colombo which were worst effected by the bad business last year.
Asian markets — A sharp overnight retreat on Wall Street sent Tokyo stocks tumbling below the psychologically sensitive 16,000 level for first time in nearly two months on Friday. Hong Kong stocks shed more than 2 percent, mirroring declines across battered Asian markets. These negative sentiments could be due to weak domestic sentiment and concerns about the possible impact of a U.S. economic downturn on regional exports.
Increase in interest rates — The 3, 6 and 12 months T-bill interest rates moved up from 11.69%, 11.97% and 12.57% last week to 11.73%, 2.00% and 12.58%.
Bartleet’s Weekly Market Commentary
Profit taking coupled with regional instability triggered a downtrend in the Colombo Bourse during the week ended 28th May 1999. The ASI and MPI lost 11.3 & 31.8 points respectively WoW to close at 546.8 & 889.3 levels respectively as opposed to significant gains recorded during the previous week. However, the market closed the week on a positive note following the attractive bonus announcement made by HNB in the form of 2 for 3, which saw the stock appreciating a massive Rs. 35/- (26%).
The market capitalisation, which opened at 110.98Bn shed Rs. 2.28Bn before closing at Rs. 108.7Bn. Foreigners once again remained net sellers by Rs. 33.8Mn with purchases and sales accounting for 41% & 61% of week’s turnover respectively. However, foreign investors dominated trading on Wednesday and Thursday and accounted for more than 70% of turnover.
Few large parcels i.e. 532,300 NDB @ Rs. 100/-, 316,100 Aitken Spence @ Rs. 106/-, 2,125,200 Asia Capital @ Rs. 5.50 changed hands during the week, while shares of Vanik, Nations Trust, CTC, Blue Diamonds traded heavily throughout the week.
Despite unfavourable conditions prevailing in the plantation industry Balangoda Plantations and Madulsima Plantations announced 10% and 5% dividends respectively for the financial year 1998. Both these companies are managed by Stassen Exports and have performed reasonably well during the above period.
Among the other dividend announcements for the week include Haycarb - 15% final, CIC - 25% final, Chemanex - 12.5% final, Asiri Hospitals - 15% interim, MLL - first & 20% final, Lanka Tiles - 8% first & final.
We advise our investors to have a closer look at the blue chips that declined sharply during the week i.e. Nestle down Rs. 7.25 (12%) - Rs. 55.00, CTC down Rs. 6.00 (12%) - Rs. 45.00, DFCC down Rs. 9.00 (8%) - Rs. 109.00, Aitken Spence down Rs. 6.00 (6%) - Rs. 100, Tokyo down Rs. 3.00 (6%) - Rs. 51.00, JKH down Rs. 11.25 (5%) - Rs. 199.75, Commercial Bank down Rs. 5.00 (5%) - Rs. 97.00.