Stock Market Forbes ABN AMRO Business Roundup
For the trading week ended Friday 24th of September 1999
— A flicker of interest
— External trade gains momentum
— Tea prices well on track
— Interest rate movementsA flicker of interest: Turnaround of market events saw a considerable improvement in market enthusiasm as weekly turnover figures notched up 53% registering an average daily turnover of Rs. 60.5m. This renewed interest was mainly driven by another spell of buying interest in the plantation stocks, again resonating positive price movements in the Colombo tea auctions. However, movements in indices remained moderate as the main market movers continued to be overlooked, as short-term gains remained precedence in local investor sentiments. ASPI registered a 0.5% advance to close at 567.2, whilst the MPI closed at 926.9 declining by 0.1%. Foreigners remained subdued throughout the week with main exceptions being on Thursday & Friday, when a few large parcels of Aitken Spence & JKH changed hands, contributing to the overall outflow of Rs.87m.
STL going public: PERC on Thursday called for investment banks to express interest to advise the Sri Lanka Government in managing the public issue and listing of Sri Lanka Telecom shares on the CSE and/or international stock exchanges. This came on the back of the failing of the three short-listed bids for a 10.5% stake, to meet government expectations. Expressions of interest need to be submitted by the 15th of October. Thereafter the short listed parties would have to go through a beauty parade, possibly towards end of November. Actual listing is expected to take place in 3-6 months thereafter. We expect the listing of these shares to result in a significant increase in local bourse’s liquidity levels and add more appeal to the overall market for strategic investors.
Tea prices well on track: Trading at last week’s tea auctions resulted in the NSA registering a Rs.6 increase recording Rs.127.70. The upward movement was most pronounced in High & Medium elevation teas registering 7% & 8% increases respectively. Prices are expected to reflect prevailing global supply constraints, mainly in India & Kenya, which competes more with Sri Lankan higher elevation teas. These movements are well in line with our expectations for a year on year increase for the fourth quarter. Note despite expected higher yoy NSA prices in the fourth quarter that the annual average is expected to be lower at Rs. 112.9 for the year. Our top three picks from the sector are Balangoda, Maskeliya & Kegalle, which are trading at 83%, 59% and 73% upside on DCF valuations, despite gaining Rs. 3.50, Rs. 4.00 and Rs. 3.50 for the week.
Interest rate movements: 6 and 12 month interest closed at 11.89% and 12.35% compared to last week’s 11.81% and 12.29%.
Bartleet’s Weekly Market Commentary
The market was on a slow upward march Monday through Wednesday owing mainly to renewed retail interest in the plantation counter, but declined towards the latter part of the week on the back of some profit taking. The ASI which started the weeks trading at 564.4 however recorded a gain of 0.5% to 567.3 while the Milanka opening at 927.9 dropped a marginal 0.1% to close at 926.9. Buying interest in severely battered plantation stocks was fuelled by significant improvement in recent auction prices and volume, resulting from the shortfall in global production. We expect tea prices to remain strong in the face of this short fall, and hence the plantation company bottom lines to improve in the quarters ahead.
Horana Plantation started trading this Wednesday after a lapse of four months with the lifting of the suspension on trading. The stock, which opened the counter at Rs. 7.50, was amongst the top five gainers for that day recording a gain of Rs. 5.00 from its previous closing, while ending the day at Rs. 10.00. All other plantation stocks too recorded significant gains from the previous weeks closing.
Turnover for the week recorded a significant Rs. 101.6Mn gain to Rs. 297.4Mn with average daily turnover gaining 52% to Rs. 59.5Mn WoW. Foreign participation for the week reflected a net outflow of Rs. 87Mn with foreign purchases and sales accounting for 23% and 52% of total turnover respectively. The market PER stands currently at 6.58 while Market Capitalization closed the week on Rs. 112.8Bn.
An announcement was made by Dockyard this week regarding an action being filed in the high court of Singapore against Metro Maritime Services/ Mr. Athula Jayasinghe for the recovery of US$650,000 the money had and received by the latter. The case presently is in progress and due to be concluded shortly.