JKH, DFCC boost bourse

Friday, 1 October 2010 01:23 - - {{hitsCtrl.values.hits}}

A mega deal on JKH, as well as investors craving DFCC Bank along with select other banking stocks, boosted the Colombo bourse to gain further momentum from its all-time-high level yesterday.

Premier blue chip JKH was the star with 5.93 million of its shares traded, with a large block done at Rs. 329 per share. JKH peaked to a high of Rs. 330 before closing at Rs. 329.50, up Rs. 10. This was on top of over Rs. 14 gain on Wednesday.

At Rs. 323, market capitalisation of JKH topped the milestone of Rs. 200 billion in terms of market capitalisation.

Hot on the heels of its mega one-for-one bonus announcement on Wednesday, DFCC received a big toast from investors. Its share price peaked to a high of Rs. 550 before closing at Rs. 494.10, up by Rs. 55.50 with over half a million shares traded.

Investor interest was robust on banking sector stocks. NDB gained by Rs. 27.80 to close at Rs. 377.70, HNB by Rs. 16.20 to Rs. 386.10.

These gains along with overall bullish sentiments saw market capitalisation gain by Rs. 22 billion and cross the Rs. 2.3 trillion mark yesterday.

Analysts said that DFCC’s announcement fuelled hopes of similar moves by other banks. This speculation was linked to NDB’s gain. However, interest on banking stocks has been evident for weeks.

The benchmark ASPI hit a new record close of 6,997.22 points with a one per cent gain, surpassing its previous record close of 6,929.90 points from Wednesday. The index is Asia’s best performer in 2010 with a 106.7 per cent gain and has risen 23.7 per cent in September alone.

However a reality check, of course, is the fact that the recent surge has pushed the index into its overbought zone with the 14-day relative strength index at 91.1, over the upper neutral limit of 70, Thomson Reuters data showed.

It is trading at the highest forward price-to-earnings ratio in Asia at 20.9, Thomson Reuters StarMine data showed. Market turnover was Rs. 5.8 billion, more than nine times the 2009 average. Foreign investors sold a net Rs. 649.2 million in shares and they have overall sold Rs. 15 billion worth this year.

Meanwhile, the rupee edged down to 111.95/97 from Wednesday’s 111.90/111.95 on banks buying dollars to square positions, currency dealers said. The currency hit a 21-month high of 112.85/90 Monday.

Hydro Power’s IPO approved

The Colombo Stock Exchange (CSE) has approved in principle an application for listing of ordinary shares of Hydro Power Free Lanka Ltd., on the main board.

The company will issue 35 million shares at Rs. 10 each via its Initial Public Offering (IPO), official opening date of which is 26 October but could be applied from 14 October.

The firm operates two 1.6 MW plants in the Gampola area and is planning to add 5.37 MW of new capacity with the proceeds, through several plants owned through three 100 per cent owned subsidiaries.

In the year to March 2010 the firm has earned Rs.115 million in revenue selling power to the national grid and net profits of Rs. 57 million, Head of Finance Sanjaya Prasad said.

The company now has 109 million shares issued. The firm is now a 50-50 joint venture between Free Lanka Power Holdings and Pussellawa Plantations.

The issue is managed by Taprobane Holdings Limited and is selling 32% of the stock to the public. Both plans have existing power purchase agreements with the Ceylon Electricity Board (CEB).