Big local names step up buying foreign blocks at Bourse
Monday, 10 February 2014 00:08
Captains invests Rs. 2.2 b more in JKH as Janus sells down; EPF, ETF too joins on the buying side of JKH
Indra Silva invests Rs. 400 m in increasing stake in COMBank as Franklin Templeton Investment Funds sells; EPF, Ravi Thambiayah, Yaseen collect COMBank quantities
EPF ups stake in Dialog with Rs. 322 m buying as Morgan Stanley fund sells
Foreign net selling tops Rs. 3 b last week as part of emerging market sell-off but new funds accumulate blue chips
The Colombo stock market last week saw heavy foreign selling in tandem with other emerging markets, but big local names stepped in to accelerate their buying, reflecting renewed confidence.
Foreign investors ended the week in a net selling position of Rs. 3.06 billion and brought the year-to-date net outflow to over Rs. 2 billion.
This was a reversal or appears to be a temporary setback when compared record inflows enjoyed in 2012 and 2013.
Top blue chip JKH saw net foreign selling of Rs. 2 billion followed by Commercial Bank (Rs. 676 million) and Dialog (Rs. 541 million). Most of the foreign selling was from funds focusing on emerging markets as they had a rocky week overall.
Despite selling by longstanding foreign funds, several new funds were active on the buying side, collecting available quantities of JKH, Commercial and Distilleries among others.
Janus figured in JKH selling over Rs. 2 billion on Thursday whilst the blocks were acquired by Sohli Captain, who is the largest shareholder in the top blue chip. Thursday saw 10.75 million JKH shares change hands for Rs. 2.46 billion.
The Captains controlled around a 17% stake in JKH by end 2013. Janus held a 7.8% stake or 77 million shares.
EPF too was on the buying side of JKH. On Wednesday it bought Rs. 120 million worth of JKH shares and followed with further purchase of Rs. 50 million on Thursday. JKH saw thin trading on Friday with around 0.7 million shares changing hands. Employee Trust Fund was also on the buying side of JKH on Friday.
Commercial Bank saw Franklin Templeton fund selling around Rs. 600 million worth of shares on Thursday when around 5.64 million shares changed hands overall for Rs. 676 million. Indra Silva figured prominently on the buying side collecting Rs. 412 million worth of COMBank shares.
Franklin Templeton Investment Funds held a 7% stake or 57.2 million shares in COMBank as of September 2013 whilst Indra Silva held a 4% stake. Since then Silva has been collecting available blocks. Commercial Bank’s full year results when released shortly will have the latest shareholding as of end 2013.
Another big local name, Ravi Thambiayah, and his investment firms also collected COMBank quantities along with EPF (which owns 9.56% of COMBank) and existing shareholder Raquel Yaseen.
EPF enhanced its focus on fundamentally sound stocks when on Friday it bought Rs. 322 million worth of Dialog shares as Morgan Stanley fund divested some of its holdings. On Friday 47.5 million Dialog shares traded for Rs. 437.6 million. EPF as of end September held 2.2% stake (178 million shares) in Dialog. Local institutions such as Ceylon Investments Plc were on the buying side of Dialog on Wednesday.
Acuity Stockbrokers said the market continued to lose momentum last week, as profit-taking by retail investors and considerable selling pressure pushed indices down.
It said significant foreign sales in blue-chip counters on Thursday resulted in a net outflow of Rs. 2.96 b, the highest since September 2011. The benchmark ASPI consequently, declined to a two-week low of 6141.72 points. Volumes however, remained strong as high net-worth and institutional investors continued to play a dominant role in the market.
Turnover levels hit a high since May 2013 (Rs. 3.7 b) on Thursday.
“The market’s momentum in the holiday-shortened week ahead is likely to remain unchanged,” Acuity said.
Softlogic Stockbrokers also acknowledged that “some selling pressure” was witnessed last week as the market was on a downward trend. This follows continuous gains in the index during the last couple of weeks amidst heavy resistance in the index at the 6,250 mark, it added.
“We expect consolidation in the index and some buying interest to return to absorb the selling pressure. We expect strong earnings in some of the fundamentally-sound counters. As a result we advise investors to hold on to the value counters and make the consolidation phase an opportunity to pick counters at bargain prices as earnings of most counters are likely to be released in the coming weeks,” Softlogic added.