ASI back to negative return as Rs. 22 b in value wiped off

Thursday, 13 October 2011 00:34 - - {{hitsCtrl.values.hits}}

The Colombo stock market yesterday is back to negative return territory for the second time in three months as Rs. 22 billion in value was wiped off due to lack of confidence and other concerns.

The All Share Index (ASI) dipped by nearly 1% bringing its year-to-date return to a negative 0.48%. On Monday it was a face-saving positive 0.5%. In mid-July the ASI sank to a negative return of 0.6% but recovered subsequently.

The overall negative run and gloomy outlook persists at Colombo bourse with analysts blaming it on a multitude of reasons. Though macroeconomic fundamentals are healthy as confirmed by Central Bank’s post-October monetary policy review, analysts cited the lack of overall confidence in the market due to certain manoeuvres of questionable nature.

Some also blamed overregulation; whilst others said prices dropping from their highly unrealistic levels was a good thing.

Yesterday’s turnover was only Rs. 1.6 billion and 64 million shares traded, with nearly 166 counters suffering dips.

“We believe that the selling has been partly due to the deadline (15 September 2011) nearing for the submission of the debtors’ list. We also believe the heavy speculative drive the bourse witnessed over the past months has reached some point of saturation with the market lost for direction. However, foreigners seem to have regained participation in fundamental counters, which had registered minimal price change over the past months,” Arrenga Capital said.

Apart from deals on JKH, a block of 15.7 million shares of Softlogic Holdings traded via a crossing at Rs. 20 each. In total 16.1 million Softlogic shares traded for Rs. 323 million with price down by 1% to Rs. 20.10.

Serendib Hotels increased the speculative count lot as the voting closed low at Rs. 30.4 after hitting an intra-day Rs. 37.9 whilst the non-voting also closed with a 6.7% dip at its close of Rs. 22.4 after touching a high of Rs. 24.7.

Regnis Lanka’s speculative play remained unfettered to the weak market play as it gained 1.7% at its close of Rs. 503.4 It was seen advancing especially after mid-trading hours. Colombo Land & Development continued to decline with heavier selling side, with Asian Alliance Insurance seen leading the price losers’ list after shedding a solid 26.5%. Some investor participation was evident in Citrus Leisure as the counter appreciated 6.2% whilst closing at Rs. 64.9.

Thanks to JKH, the market saw net foreign inflow of Rs. 427 million. DNH Financial said that although net foreign selling had generally been on a rising trend on a year-to-date basis, it shouldn’t be a cause for concern and did not in any way indicate a declining appetite for Lankan equities.

“Foreign investors battered by global markets are understandably shaving off profitable positions in the Sri Lankan bourse,” DNH said, adding that a significant majority of foreign portfolio investments were likely to have been made during pre-bull run years at considerably lower price levels.

Meanwhile, world and European stocks were at a three-week high with car manufacturers as top gainers. Chinese shares were on a rebound. The MSCI Asia Pacific Index gained 0.8%, erasing its early losses with S&P 500 Index also advancing by 1%. Euro stocks fell earlier on speculation of the political dispute in Slovakia expecting to delay the approval of Euro’s bailout fund.