Deutsche Bank AG London steps up buying into JKH

Tuesday, 1 January 2013 00:29 -     - {{hitsCtrl.values.hits}}

Notwithstanding some reservations over the country’s economic outlook by the economists on its research team, Deutsche Bank AG London has stepped up buying into Sri Lanka’s premier blue chip John Keells Holdings (JKH).

On Friday Deutsche Bank AG London bought Rs. 610 million worth of JKH shares, accounting for almost the entirety of net inflow worth Rs. 619 million. It bought 2.5 million JKH shares at Rs. 219 each whilst a further 250,000 shares were collected as well for around Rs. 53 million. Analysts said Deutsche Bank has been collecting JKH quantities in recent weeks though it had shed some as part of trading as well.

As at September 2012, Deutsche Bank was the sixth largest shareholder at JKH with a holding of 28.6 million shares or 3.4%, up from 3.3% in June. Foreign holding in JKH as of yesterday was a high 54% and the premier blue chip is considered as the darling of foreign funds. In end-2011, the foreign holding accounted for only 38.5%. Compiled by economist Kaushik Das, Deutsche Bank in its 18 December 2012 Asia Economics Special, said it was “cautiously optimistic” on Sri Lanka’s prospects for 2013.

“We forecast real GDP growth to improve to 7.0% in 2013, from a likely 6.2% outturn this year.”

“Throughout our discussions we sensed an urgency among policymakers to return to a high growth trajectory, as was seen in 2010/2011 (8%+ growth), post the end of war in 2009.”

This obsession with high growth is in our view a key risk to watch out for in the medium term, as achieving those targets may come at the cost of a host of policy errors, thereby exposing the economy to repeated boom and busts cycle,” noted Deutsche Bank.

Deutsche Bank’s purchase comes hot on the heels of an Aberdeen fund picking up Rs. 313 million worth of JKH shares recently whilst a new Europe-based emerging markets small cap fund picked up Rs. 120 million worth of JKH shares last week.

On Friday the major seller was Sri Lanka Insurance Corporation, which divested the biggest block of 2.5 million shares and NSB sold the balance. Both financial services institutions have been selling select stakes as part of profit taking before the close of their financial year.

JKH’s biggest shareholder, the Captain family, which controls a 16% stake, was inactive on premier blue chip on Friday but was busy collecting Sampath Bank quantities. Sampath Bank saw 0.45 million of its shares traded for Rs. 91.6 million. Captains collected the most, and seller was SLIC.