JKH remains solid; LOLC, Bairaha shine in 2010

Premier blue chip John Keells Holdings (JKH) remained the undisputed king in the elite league of Top 20 most valuable stocks in the Colombo bourse whilst there was some outstanding performance by some others as well as one which catapulted.

JKH rose by a solid 74% price wise and a commanding market capitalisation of Rs. 186 billion whilst Carson finished as the number two displacing SLT which enjoyed the spot in 2009.

SLT though its share price improved from Rs. 46.50 to Rs. 49 had to settle down at number six in 2010. Number three Dialog and fourth placed Commercial Bank retained their positions. LOLC was the star performer as it rocketed to top 20 to be ranked at number 10. For 2010 its share price grew by a whopping 778% whilst its market capitalisation grew by 832% to Rs. 60.73 billion. It was also third highest gainer percentage wise in 2010 whilst Bairaha Farms topped this list with a whopping 1,190% rise, the bulk of it witnessed in the last month of 2010. The percentage wise gainers list shows the unprecedented return some stocks have provided for investors.

In the top 20 elite league of most valuable stocks JKH Group collective has three companies, two each by Carson Group, Aitken Spence and Ceylon Theatres (CT Holdings). CT Holdings along with LOLC were new entrants to the top league whilst among top risers within top 20 were Cargills and Sampath Bank.

Environmental Resource Holdings and Hayleys which also saw sharp gains in their prices (ERI market cap up by 212% to Rs. 27.1 billion and Hayleys by 100% to Rs. 25.8 billion) were placed 21st and 22nd despite accounting for over 1% each of the Colombo’s market capitalisation which amounted to Rs. 2.2 trillion in 2010. Only these 22 companies accounted for between 1% and 8% share of the market capitalisation.

Those who moved out of the 2009’s Top 20 in 2010 were Chevron Lubricants, Colombo Dockyard and Hayleys despite their share price improving.

In a critical analysis share prices of almost all in the Top 20 closed lower compared to their 52-week high. This was understandable given the correction the overall market experienced in the last two months from the peak on 1 October on which date the ASPI reached its all time high of 7,147.77 points and market capitalisation was Rs. 2.35 trillion. The year-end ASPI closing was 6,635.9 points whilst market capitalisation amounted to Rs. 2.2 trillion which confirm a fair amount of value was wiped off though there was recovery at the tail end of 2010.

The 2010 gain of 96% though down by 8% from October peak, was on top 125% return offered in 2009. Colombo stock market finished 2010 as the world’s second best and Asia’s best for the second consecutive year running. It lost the world’s number one slot to Mongolia which gained by 138%. As many concluded 2010 was a stellar year though the achievement partly had the blemish of what some described as “artificial bubble” in the middle of the year. This saw the Securities and Exchange step in prompting some to allege an element of over regulation.



The 2010 was also a watershed year in terms of several other achievements as far as market development was concerned. Among key measures effected were dematerialisation of securities accounts - 100% lodgment in the CDS; completion of regulatory framework for exchange rated funds; an updated Code for Unit Trusts; Simplified and reduced transaction cost (except Budget 2011 making a slight increase), tick size reduced to 10 cents; consultation on minimum public float etc. The SEC also granted licences for 5 Stock Brokers, 5 Investment Managers, 9 Margin Providers,  3 Under writers and 1 Stock Dealer and finalised the rules pertaining to ESOPs. The year 2010 also saw the introduction of price bands to arrest volatility in the market and formalisation of credit arrangements to clients.

A memorable development in 2010 was the massive public draw for Initial Public Offerings such as Singer Finance, Odel and Laugfs whilst the market growth was approximately 100% with 10 new companies.