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Friday’s Rs. 12.4 billion turnover, the highest in a year, at the Colombo stock market is being credited by brokers to ‘near-pure retail play’, as investor sentiment gathered more momentum, spearheaded by high-net-worth individuals.
The Colombo Stock Exchange (CSE) on Friday also saw the all-time highest intra-day gain (ASPI at 7,762) before closing up near 4%, or 291.34 points to 7,734. The benchmark index is now at the highest level since 2012 and Friday’s gain was also the 13th consecutive one. The S&P SL20 Index shot up by 4.34%, or over 120 points.
Year-to-date ASPI was up 14.18%, thereby moving to the double-digit level; and S&P SL20 was up 10.04%. On Friday, over 433 million shares changed hands via a record 61,722 trades.
Most traded in terms of value were Expolanka Holdings (Rs. 1.97 billion for 38 million shares), Browns Investments (Rs. 1.3 billion for 180 million shares), LOLC Holdings (Rs. 1.16 billion for 5.6 million shares), Dipped Products (Rs. 726 million for 1.8 million shares), and Vallibel One (Rs. 726 million for 13.3 million shares).
LOLC (up Rs. 45.25 or 24.93% to close at Rs. 226.75), Expolanka (Rs. 6.40 or 13.62% to close at Rs. 53.40), Commercial Leasing, JKH and SLT were major contributors to the ASPI's gain on Friday.
During the week, the ASPI and the S&P SL20 gained 8.64% and 7.32%, respectively, whilst recording an average daily turnover of Rs. 9.47 billion.
Separately, the SEC in a statement yesterday said the Average Daily Turnover of the CSE during the first 15 days of January was Rs. 7.94 billion, compared to Rs. 1.8 billion in 2020. “It is a huge leap from the daily average turnover of Rs. 711 million recorded during 2019,” it added.
Bloomberg last week identified the CSE as the second best-performing equity market in the world.
The CSE on Friday also saw its highest-ever market capitalisation of Rs. 3.38 trillion.
Some analysts have raised concerns over the sharp rise of indices as well as share prices of select stocks given the fact that foreigners have been net sellers to the tune of Rs. 51 billion in 2020 and Rs. 1.5 billion 2011 year to date and local institutional buying has been less than desired. Retailers are also investing on borrowed funds at low interest rate.
However some brokers defended that given the low interest rate regime and under performance of host of fundamentally sound stock and those of sectors which have greater upside post-pandemic were among key drivers.
“What we saw on Friday is a real local stock market,” said one broker, adding that apart from retail play local high net worth investors were active too. “The latter in many countries are market makers and retailers who missed the earlier run are joining the market seeing further upside.” Another supporting factor is the Market Price Earnings Ratio (PER) being attractive at near 13 times as against 19.7 times in 2014 and 25 times in 2010 though economic conditions were different in the earlier years.
