Pain after pleasure!

Gain and you shall play the band syndrome continues as two more added increasing the cumulative number to 24

Bringing the total to 24, two more securities were included to the price band yesterday by the Securities and Exchange Commission (SEC).

They were Alufab Ltd., and Lanka Aluminium Ltd, both of which incidentally enjoyed the second and third highest gainer slot percentage wise respectively yesterday.

Top gainers ending up in the price band is getting common.

Of the last three who were slapped with the band, Horana and Elpitiya plantation companies suffered the fate soon after they set all time high prices.

Last Wednesday as part of an overall rush to plantation stocks, Horana Plantations peaked to a high of Rs. 72 before closing at Rs. 70.50 beating its previous best of Rs. 49.50 whilst Elpitiya jumped by 30% and figured as the biggest gainer percentage wise to close at Rs. 45.60.

Yesterday Alufab rose by 21.89% or Rs. 10.90 to close at Rs. 60.70 whilst it touched an all time high of Rs. 69 intra-day. Lanka Aluminium peaked to a high of Rs. 83 before closing at Rs. 72.70, up by 19.77% or Rs. 12.

Lanka Aluminium is currently facing a takeover offer after Dhammika Perera triggered the Code when he increased his stake to 34% from 26.5% with a purchase of 8% stake at Rs. 41.50 per share.

With yesterday’s two inclusions, at present there are eight companies who are subject to 10% high or low price band. Of that eight, two securities will end their 15-day restriction today.

Year to date, there has been nine companies who came under the SEC Band whilst the number is 24 since the introduction of price band in mid-September.

Despite criticism from certain sections of the market, the SEC remains firm over the band on the grounds that it has instilled discipline in the market, reduced volatility in addition to checkmating cowboy type investors and brokers. Though SEC admitted that the price band is reviewed regularly no firm decision has been made yet whether to reduce the duration or the band or even remove it totally.

Hayleys back in most valuable Top 20

Manufactured export rich diversified blue chip Hayleys Plc has returned to the elite league of top 20 most valuable companies thanks to a recent gain in its shares following the takeover move by business leader Dhammika Perera.

Hayleys yesterday saw 452,100 shares traded with institutions and retailers at play. In a declining market Hayleys share price zoomed to Rs. 415 before closing at Rs. 414.10, up by a substantial Rs. 19.10. This saw its market capitalisation increase to Rs. 30.97 billion thereby moving up to the 19th place.         

Hayleys finished 2010 at 21st place with a market capitalisation of Rs. 25.87 billion with a closing price of Rs. 345. Yesterday’s closing reflects an increase of Rs. 69 or 20% within a month. Last week it overtook the previous 52-week highest price of Rs. 394.40 and is currently trading at an all time high.

Hayleys was the second biggest contributor to the turnover.

Controlling 30% stake biggest shareholder Dhammika Perera together with related party Royal Ceramics last week announced a mandatory offer at Rs. 380 per share to buy the remaining shareholding.

Colombo bourse ends January with 8% return

The Colombo stock market ended the first month of 2011 with a slightly over 8% return to investors.

The 8.12% gain in terms of the movement of the benchmark All Share Price Index (ASPI) makes it Asia’s best performer, a fete it has enjoyed for two consecutive years since 2009. The return would have been over 9% if not for sustained profit taking by investors since mid last week. ASPI hit a record closing high of 7,261.37 on 24 January after touching a new intraday peak of 7,320.22 points.

Contrary to broker expectations the market declined today marginally with ASPI down 0.2% and MPI 0.4% though turnover was a respectable Rs. 3.17 billion.

“The week started with indices dipping slightly, continuing the selling pressure from last week. Investor sentiment is mixed amidst the current congestion period of the market. The direction will depend on the extent to which investors would evaluate the interim results,” NDB Stockbrokers said.                                     

“Market commenced the week, with the indices gaining marginally during the early hours of trading, but lost ground leading both indices to close the in the red,” Asia Securities added.

On Friday Asia Securities in its weekly market report said: “The week was predominantly in the red, due to investors booking in profit, back of the market gains during the previous week. Albeit, the dip during the current week we expect the market to gain momentum this week.”

 “We expect investors to remain bullish on fundamentally strong counters within key sectors with sound earnings potential, while occasional profit taking to cash in on gains is expected to keep the market in check,” Acuity Stockbrokers said in its report.

Yesterday’s dip in the Bourse to its lowest level in over a week, was third straight session.

Foreign investors sold a net 91.5 million rupees’ worth shares on Monday. They have sold a net Rs. 2.9 billion so far in 2011, after selling a record net Rs. 26.4 billion in 2010.

Other analysts said that investors appear cash hungry hence profit taking continued on to the new week as well. They also noted that market had long factored in strong earnings in 3Q and this may explain why investors haven’t rushed to buy shares of companies which have so far reported impressive results.

In a strange twist, even Sampath Bank which announced a record high dividend for shareholders, remain depressed. Sampath saw its share price dip by Rs. 4.90 to Rs. 295.40 whilst on Friday it dipped by over Rs. 2 to Rs. 300.30.

On Thursday after the market was closed, Sampath Bank declared a considerably high final dividend for 2010 at Rs. 6.60 per share, exclusively in the form of a scrip dividend, subject however to a payment of 10% Withholding Tax on the dividend.

This final dividend is in addition to the interim scrip dividend of Rs. 3 per share already paid in September 2010 on the number of shares of 75.8 million which then existed. However, the proposed final scrip dividend of Rs.6.60 per share will be paid on the increased number of 152.8 million, consequent upon the two sub division of shares, given effect in 2010.

Sampath said that the new shares to be issued under the proposed scrip dividend would be priced at Rs. 300 per share and accordingly, 3,025,599 fully paid new voting shares would be created, which would be allotted to the shareholders on the proportion of their shareholdings.

The proposed scrip dividend will be funded entirely out of the profits of the bank for 2010 and hence there will be no capitalisation of reserves.

Power & Energy and Bank, Finance & Insurance and sectors were the highest contributors to the market turnover. Power & Energy sector index increased by 5.21% while Bank, Finance & Insurance sector index decreased by 0.20%.

Laugfs Gas made the highest contribution to the market turnover. The share price increased by Rs. 7.50 (15.66%) and closed at Rs. 56.70.

Asia Securities said Laugfs Gas voting shares saw mixed investor sentiments and non-voting share was backed mainly by retail and high net worth investors. Hayleys PLC and Poultry sector counter Ceylon Grain Elevators continued to grab investor attention, where both counters saw retail and high net worth participation. Furthermore, Asia Alliance Insurance was traded mainly on the back of Institutional participation where counter was the biggest gainer percentage wise with 35% to close at Rs. 169.90 whilst it hit a peak of Rs. 175.

Meanwhile the rupee LKR= fell for the fourth straight session to close at 111.18/22 a dollar from Friday’s 111.12/111.18 on continued strong importer dollar demand, traders said.