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Asian Tribune is published by E-LANKA MEDIA(PVT)Ltd. Vol. 20 No. 111

Market on upward trend, while investor cautious

By Quintus Perera – Asian Tribune

HNB Stockbrokers indicated that the stock market continued its positive momentum this week with both All Share Price Index (ASPI) and Milanka Price Index (MPI) gaining ground from last week’s closing levels. This week the ASPI gained 47.5 points to close at 2603.3 while the more sensitive Milanka Price Index (MPI) gained 31.2 points to close at 3648.8 points.

JKH continued to dominate the market with a contribution of Rs.1.09 billion towards market turnover. Majority of JKH turnover for the week was generated on Tuesday with a significant 7 million shares changing hands. During the week the Counter traded within a price range of Rs.150 and Rs.145. The share closed the week at Rs.147.25 representing a 0.8 percent increase week on week.

During the week the controlling stake of Asia Capital changed hands with 54 million shares in Asia Capital been bought by Asia Fort Asset Management (Pvt) Ltd and A.B.Khalid, triggering the mandatory offer threshold under the Takeovers and Merger Code. The Counter contributed Rs.790 million towards this week’s turnover while trading with in a range of Rs.14.5 and Rs.12.50. The Counter gained 5.7 percent week on week to close the week at Rs.13.75.

SLT was also in the spotlight this week with Supreme Court issuing an injection order on the sale of 25.3 percent stake in SLT, which is currently owned by NTT. With the news of the court order SLT share price dipped by 3.2 percent to close the week at Rs.37.25. During the week SLT contributed Rs.171 million towards weekly turnover while trading within a range of Rs.39.00 and Rs.36.75.

Total market turnover for the week stood at Rs.2.52 billion compared to Rs. 754.9 million last week. The average daily turnover for the week stood at Rs.505.3 million up by 234 percent compared to Rs.150.98 million last week.

Foreign investors continued to remain net buyers this week amounting to Rs.149 million. Foreign purchases amounted to Rs.1.79 billion representing a significant 353 percent growth from last week while foreign sales for the week amounted to Rs.1.64 billion increasing by a mammoth 1140 percent compared to last week. Foreign participation for the week stood at 68 percent of total activity.

Asia Capital, Tess Agro, JKH, Ceylon Glass and SLT were among the highest traded stocks for the week.

Meanwhile in their point of view HNB Stockbrokers indicated that while cautious investor sentiment to be continued as expected by HNB Stockbrokers, the market gained by 47.5 points during the week with foreigners continuing to be net buyers. However the retail activity in the market remained relatively low, with macro uncertainty still lingering on the minds of investors.

BOP surplus continues to increase

A 19.7 percent YoY increase in imports and 6.8 percent YoY increase in exports resulted the trade deficit to increase by 43.5 percent in April 2007 compared to the corresponding period last year.

However a healthy growth in remittances by 36.4 percent helped the Balance of Payments (BoP) surplus to increase further to $ 292 million at the end of April 2007 compared to $240 million at the end of March 2007.

The highlight of the month was the high increase in petroleum imports by 65.1 percent to $261.2 million compared to $158.2 million in April 2006. This increase was mainly due to both price and volume increases in petroleum products.

Meanwhile during the 1st 4 months of 2007 the cumulative exports and imports increased by 11.5 percent and 7.4 percent respectively to US$2,252.7 million and US$ 3,306.6 million resulting in a trade deficit of US$ 1,051 million, 0.5 percent lower than what was experienced during the same period last year.

Overall during the year, lower trade deficit and an increase in worker remittances by 17.4 percent to UD$ 862.6 million caused the surge in BoP. We expect the BoP to remain positive during 2007 mainly backed by worker remittances; however the North and East conflict will play a key role in determining the BoP balance as further deteriorations in the security front could curtail Foreign Direct Investments (FDI) and foreign funding to the country.

Market trend to be weak but positive

The HNB Stockbrokers expect the market to remain positive in the coming week unless some major negative developments take place in the security front. However the weak market sentiment they experienced over the recent times is likely to continue. Thus they feel that activity levels would continue to remain quite low with indices expected to inch forward during next week.

- Asian Tribune -

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