Foreign craving for stocks grows; inflow tops Rs. 28 b

Tuesday, 21 August 2012 02:11 - - {{hitsCtrl.values.hits}}

As continuously highlighted by the Daily FT and perhaps dumbfounding critics and locals, foreign craving for stocks in the Colombo Bourse is growing, with net inflow surpassing Rs. 28 billion yesterday with the addition of fresh buying worth Rs. 980 million.

Non-nationals accounted for 28% of total market turnover with purchases amounting to Rs. 984.2 million and selling of only Rs. 4 million triggering a net inflow of Rs. 980.2 million. This inflow pushed the year-to-date inflow to Rs. 28.1 billion as per Softlogic Stockbrokers.

The biggest foreign buying was 10.82% stake or 2.4 million shares at Rs. 250 each in a deal worth Rs. 604.3 million in Asiri Central by Actis Investment Holdings SL Ltd., a leading emerging markets private equity investor.

The fresh interest by Actis, which had benefitted by previous exposure to listed stocks, prompted analysts to speculate the fund may look at further investments. That apart further foreign buying was seen yesterday in Lion Brewery and Ceylon Beverages as well.

Growing foreign interest in the Bourse appears to have energised some local investors though most are still on the sidelines. Improved overall sentiment pushed all indices to achieve healthy gains. ASI gained 22.33 points or 0.45% (to its highest level since 2 August), and MPI by 19.83 points or 0.44% whilst the S&P index improved by 7.23 points or 0.26%. Turnover was a robust Rs. 1.76 billion.

Top contributors to the ASI’s gain were JKH (6.23%) following a price escalation of 1.7% or Rs. 3.40 on lower volumes with Captains on the buying side, Selsing (4.52%) for its price rise of 29%, Carsons (4.47%) on account of its 2% price gain, Lion (3.98%) as its share price rose by 9% and Indo (2.75%).

Lion Brewery saw 1.2 million of its shares traded for Rs. 276.2 million with CDIC among major sellers whilst other major contributors were Ceylon Beverage (Rs. 89.5 million) with seller being Sri Lanka Insurance Life Fund and Central Finance (Rs. 45 million). Asiri Hospital topped the turnover with Rs. 611.75 million. (See box story).

DNH Financial said yesterday: “Contrary to widespread belief, investing in the bourse has not been completely abandoned as pockets of investors appear to be adopting a highly selective approach in order to pick value in the market.”

Though acknowledging the fact that the majority of investors have largely been sitting in the wings over the last few weeks in anticipation of a market trigger that would propel the market to the next level, heading further into the third quarter, DNH advised investors to refrain from assuming any speculative positions.

“Instead concentrate on carefully selecting counters that will benefit from the robust domestic consumption story and report sustainable earnings growth and healthy cash flows notwithstanding high energy and interest rates,” DNH added.

Lanka Securities said: “Market resumed trading with the positive momentum that was seen last week continuing. Most counters saw relatively good activity with many private deals taking place.”