Sri Lankan equities had outperformed the influential MSCI Frontier Markets by 47% in December 2020, revealed Softlogic Stockbrokers Research.
“The month of December proved to be one of the strongest months of the year, despite the Fitch Ratings downgrade towards end November, in testament to the strong sentiment within the market. Overall, Sri Lankan equities outperformed ‘MSCI Frontier Markets’ by 47% in December 2020 and continues to be one of the more undervalued markets, trading at a 44% discount (PBV) to its ‘MSCI Frontier Market’ peers,” it said.
Overall Sri Lanka’s equity market continued to rage forward in the month of December, gaining 530.5 points (8.5% month-on-month), and gaining 645 points, recording a YTD ASPI gain of 10.5 for the year to end at 6,774.2. However, the more liquid S&P20 index declined by 298.9 points (10.2% YTD) and increased by 184.2 points in the month of December to close at 2,638.1 (7.5% M-o-M), showing a recovery lag that may be corrected over the coming months.
Softlogic said heavy foreign selling and renewed local buying interest resulted in the CSE surpassing the Rs. 3.5 billion mark in daily turnover for the first nine days, of which a turnover above Rs. 3 billion was maintained for six consecutive days.
The CSE recorded the highest average daily turnover levels for the month at Rs. 3.2 billion ($17.2 million, +26.6% M-o-M), which is 70% higher than the average daily turnover levels of the year (Rs. 1.9 billion or $10.1 million).
Whilst continuous foreign selling remains a major challenge for the CSE recording net outflow for the year close to Rs. Rs. 50.7 billion ($271.7 million), net foreign selling for the month of December was close to Rs. 3 billion, or $16.5 million.
The turnover for the month was primarily driven by local investor interest centring on Browns Investments (Rs. 12.9 billion), John Keells Holdings (Rs. 4.6 billion), Expolanka Holdings (Rs. 3.6 billion), Hemas Holdings (Rs. 2.4 billion), and Piramal Glass (Rs. 2.1 billion), according to Softlogic Stockbrokers Research.