Net foreign inflow tops Rs. 33 b

Foreign buying into select blue chips continues unabated as net inflow crossed the Rs. 33 billion mark yesterday.

Foreigners bought Rs. 1.35 billion worth of shares and their sales were only Rs. 0.5 billion, resulting in a net inflow of Rs. 813 million, bringing the total year-to-date figure to Rs. 33.4 billion. As of Friday it was Rs. 32.6 billion, according to Softlogic Stockbrokers.

Last month net foreign inflow amounted to Rs. 3.06 billion, up from Rs. 2.83 billion in August. During the quarter ended September, foreign net inflow was Rs. 8.33 billion, according to CSE data.

The continued net inflow has proved sceptics of the Sri Lankan economy and Colombo Bourse wrong. However, foreign buying has been largely on attractive valuations of select blue chips, which the majority of local institutional investors fail to see, according to analysts.

The foreign inflows at an all-time high is in comparison to the Rs. 19 billion outflow last year on top of Rs. 26 billion flight in 2010.

JKH, which remains the most outstanding liquid blue chip by offering over 20% year-to-date return, saw a fresh round of foreign buying yesterday, with around 3.8 million JKH shares trading for Rs. 785 million.

Bullish outlook by foreign funds has largely gone unnoticed by retailers in general. Last week retailers were less active whilst sentiments were low. The overall bearish view has resulted in All Share Index returning to 7% negative year-to-date return, reiterating its struggle to move to positive territory despite rebound in overall sentiments since mid-August.







Analysts said that the market had risen sharply in recent months, hence profit taking by previously-battered retailers was understandable. Others pinned the downturn of late to uncertainty over the direction of the interest rate, which has been less convincing. These analysts however took comfort of the fact that a strengthening rupee was welcome and the Government’s stated move towards a lower interest rate scenario would help the equity market.

Presentation of the 2013 Budget next month is another key development which investors are awaiting despite successive budgets in the past being progressive as per most analysts, except that the external environment and a few local shocks have made the road bumpy this year for post-war Sri Lanka.

Yesterday the ASPI saw a clear downward trend as it continuously glided down to close with a 69.4 point loss, whilst the MPI tumbled at a faster pace to close with an 87.7 point dip.

Losses in the Milanka basket were predominant subsequent to the dips in Sampath Bank (-2.96%), John Keells Holdings (-0.2%), Commercial Bank (-3.0%), Colombo Fort & Building (-7.8%), Lanka Orix Leasing (-3.3%) and Nation Lanka Finance (-4.9%). The S&P SL20 Index had only Nestle Lanka and Carsons Cumberbatch closing in the green, whilst the rest were all seen strongly in the red. The index closed down by 1.3%.

JKH led the crossing board bringing life to the turnover during the mid-hours of trading. The quadrant crossing at Rs. 205.0 per share added 3.7 million shares to the diversified counter’s total volume traded as it closed with a 0.2% loss at Rs. 205.

Softlogic Stockbrokers said the slow market was given another boost as a triad crossing emerged in Environmental Resources Investment and its Warrants. The normal share saw a 19.9 million quantity changing hands at Rs. 15.3 whilst W:0003 and W:0006 too replicated the 19.9 million share crossings at Rs. 4.9 and Rs. 5.3 respectively.

Interest continued in Lion Brewery with the price remaining undisturbed at Rs. 245. Browns Beach Hotel saw some active play as two notable transactions added 190,000 shares to the counter’s volume in the market. Coco Lanka continued with active play following its strategic move to be fully-fledged F&B investment holding company. However, the voting share slid 16% to Rs. 47.70 amidst profit taking despite the announcement for a rights and a subdivision with Non-Voting also was seen slipping 13.1% at close.

The two low-cap finance sector players, Capital Alliance Finance and Swarnamahal Finance, saw some on-board deals with the former encountering two trades taking 82,000 shares at Rs. 29, whilst the latter saw five trades adding 622,500 shares at Rs. 4.5 and Rs. 4.6. Nations Finance also saw some active involvement during the day but with the share tumbling down 4.9% at close.

Sampath Bank was made noticeable after two on-board transactions took 96,100 shares at Rs. 200 and Rs. 200.1. Commercial Bank continued with its momentum but with the share slipping 3% at its close of Rs. 106.9. NDB too moved on an active note as it closed with a 3.4% dip at end.

Interest was also visible in Chevron Lubricants and Aitken Spence Hotel Holdings whilst Tokyo (Non-Voting) moved in with Saturday’s news of the increase in price of cement.