Stock Market Forbes ABN AMRO Business Roundup
For the trading week ended Friday 1st of October 1999 - Fading off of the plantation fever leaves the market flat
- Indices improve despite increased foreign selling
- Plantation sector
- Interest rate movementsFading off of the plantation fever leaves the market flat: Indices closed flat despite interest in plantations continued to lift the average daily turnover to Rs. 86m registering a 42% increase wow. ASPI closed at 568.6 whilst the MPI stabilised at 923. Foreign activity remained more or less similar to last week but resulted in a total outflow of Rs. 130.3m compared to last week’s Rs. 86.9m outflow. Agalawatte Plantations & Distilleries were the mostly traded stocks for the week.
Indices improve despite increased foreign selling: Foreign participation registered a net outflow of Rs. 314.3m compared to last month’s inflow of Rs. 292m. However this apparent retrieval of funds by this segment left the indices unscathed as the benchmark ASPI registered a 1.3% gain compared to a 1.7% loss last month. ASPI closed at 568.6, whilst MPI gained O.6% to close at 923.1. The positive-impact on indices was mainly on the back of the rally in the plantation sector. Plantation stocks started to pick up around the third week of the month coinciding with the marked improvement in tea prices registered in the week’s auction. The sector index picked up 42% to close at 319.5. Other success stories of the month were the Stores & Supplies and Diversifieds, which gained 3.7% and 4.7% for the week.
Plantation sector: The NSA registered a 14% increase for the month, reflecting the improved global demand conditions. The main contributor to the upward trend was from the high growns. However last weeks trading saw signs of stabilising in prices registering a slowdown in the wow price increases. We expect the prices to improve in but at a slower pace in the coming months given the usual increased demand on the back of stock piling for the winter season. Though recent rally reflects the ample opportunities available in the plantation stocks to grab some easy money if you get the timing right, we believe given the high volatility attached to the sector, safer exposure to these stocks to be through the holding companies, namely JKH, Dipped Products & Richard Pieris. However our top picks within the sector remain as Maskeliya, Balangoda & Kegalle which are trading at 30.1%, 39.6% & 37.4% discounts based on DCF valuations as at present.
Interest rate movements: 6 and 12 month interest closed higher at 11.95% & 12.43% compared to last weeks 11.89% and 12.35%.
Barleet Mallory Market Commentary
Trading this week at the Colombo Stock Exchange recorded a high on Tuesday with the ASI and MPI peaking at 573 and 930.4 levels, only to take a minor dip towards the latter part of the week to end at 568.6 and 923.1 points respectively. Profit taking on plantation stocks coupled with some foreign selling on blue chips contributed towards the decline in indices but accounted for a significant portion of turnover for the week. Turnover this week topped the 400Mn mark after a lapse of 7 weeks to close at Rs. 430.57Mn, up 45% WoW while average daily turnover for the week was an encouraging Rs. 86Mn and helped boost average daily turnover for the month to Rs. 54Mn.
Trading continued to be dominated by the plantation counter for the second successive week with the index gaining a further 40.8 points or 15% to close at 319.5 points. Tea auction prices continued to remain strong while for the first time this year, cumulative crop figures for Sri Lanka to August indicated a drop of around lMn Kgs or 0.5% YoY. Month of August recorded the highest drop in crop this year of 7Mn Kgs YoY to 19.5Mn, a decline of 26.5%.
Foreigners remained active on the selling side, with a net foreign out flow of Rs. 138.55Mn, up 59% WoW. Foreign purchases and sales for the week totaled Rs. 36.6Mn and Rs. 175. 1Mn respectively and accounted for 8.5% and 32% of total turnover. A further drop in some of the fundamentally sound blue chip stocks already trading at bargain levels, was witnessed this week, on account of significant foreign selling in these counters. With the CSE sponsored fund managers conference to get off the ground next week, it is anticipated that some foreign infusion would be forthcoming in the weeks ahead.
Kotagala Plantations announced its intention of relinquishing the lease on Perth Estate, Horana (approximately 633 hectares in extent) to the BOI for the development of an Industrial Township for a compensation payment of Rs. 109Mn, subject to the approval of the Golden shareholder.