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Asian Tribune is published by E-LANKA MEDIA(PVT)Ltd. Vol. 20 No. 109

Speculation boosts market activity

By Quintus Perera – Asian Tribune
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HNB Stockbrokers in their weekly market review indicated that the stocks closed higher this week with heaved retail participation concentrated on few selected stocks, lifting up the overall market momentum. The upswing of the bourse was caused by heavy speculation leading to satisfactory gains in the indices and turnover. Indices for the week made moderate gains where the All Share Price Index (ASPI) edged up 38.9 points or 1.5 percent to 2624.5 points while the more liquid Milanka Price Index (MPI) gained 35.6 points or 1.01 percent to close at 3554.7 points.

Touchwood came out within the top range once again with a total activity level of slightly more than Rs.1 billion. The counter was showing much volatility in its share price during the week hitting a high of Rs.160 and a low of Rs.91.25 gaining Rs.39.50 over the week. Strong speculation continued on the counter as investors were anticipating a change in the management structure for the forestry firm followed by a 29.18 percent strategic stake bought by LOLC. The counter closed the week at Rs.131.25 per share giving yield of 43.05 percent WoW.

Trades in the banking counter HNB(voting shares) contributed over Rs.991 million to the weekly turnover. The counter traded between Rs.97.75 and Rs.114.25 per share gaining 13.03 percent on WoW to close at Rs.112.75. On Thursday over 9.5 million of HNB shares
changed hands contributing significantly towards the day’s turnover.

Emerging to a top rank was the heavyweight counter Dialog with a total contribution of Rs.523 million towards the total market turnover, which was also the most traded stock for the week with 21 million shares been traded. The huge crossing that took place on Thursday saw 20.6million shares of Dialog changing hands. However the counter closed 1.04 percent down from last week’s closing price of Rs.24.

LOLC, involved in a couple of big trades recently, witnessed growing investor attraction for the counter. The counter saw almost 3 million shares being traded for the week with the share price rising to Rs.167.5. The Counter contributed Rs.451.5 million towards the weekly market turnover. The overall share price surged by a substantial 46.2 percent to close at Rs.153.5 per share.

Intense trading by retail investors boosted this week’s market turnover leading to a total of Rs.5.18 billion, up by an impressive 280.1 percent from last week. Thursday alone market hit a turnover of Rs.2.62 billion aided by the 2 strategic deals of Dialog & HNB. Meanwhile the daily average turnover for the week stood at Rs.1.04 billion.

Total foreign participation this week amounted to 27.32 percent, down from last week’s 37 percent. A net foreign inflow of Rs.1.23 billion was posted for the week, with foreign purchases totaling Rs.2.03 billion and foreign sales totaling Rs.0.80 billion. Foreign buying and selling was up by 266 percent and 74 percent while a significant 1193.8 percent was witnessed in net inflows.

Dialog, Walk & Greig, HNB and Touchwood were among the heavily traded stocks for the week.

Meanwhile in their point of view the HNB Stockbrokers indicated that activity levels shot up during the week as retail investors were engaged in speculative trading. Overall the All Share Price Index (ASPI) gained by 38.9 points during the week while the more sensitive Milanka Price Index (MPI) gained by 35.6 points compared to last weeks closing levels.

Be prudent in exploiting trading opportunities

They expect retailers to remain active in the market during next week resulting in healthy turnover figures, though it would not be as high as what was witnessed this week. We believe certain stocks that are favoured by retail investors are trading at unwarranted price levels at this moment, thus they advise investors to be careful when trading on these overvalued counters. Furthermore in their opinion trading opportunities would continue to exist in the market but HNB Stockbrokers strongly advise investors to be prudent in exploiting these opportunities and not to chase too aggressively behind speculative shares.

Meanwhile government announced that the Sri Lanka’s Debut International Sovereign Bond Issue was oversubscribed by more than 3 times. These bonds have a 5-year maturity and carry a coupon of 8.25 percent per annum. They expect that the money obtained from the bond issue would ease pressure on the exchange rate and interest rates. This in turn would have a positive impact on the stock market, which was getting suffocated without funds as a consequence of high interest rates.

- Asian Tribune -

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