Bourse basks in first-ever YTD net foreign inflow since 2009

Thanks to interest in premier blue chip John Keells Holdings (JKH), the Colombo stock market for the first time since end 2009 achieved a year-to-date (YTD) net foreign inflow.

Though 2012 is only 26 days old and the value is only Rs. 908 million, the net inflow on a ‘YTD basis’ is significant as it is happening after two years and midst negative run.

Analysts said that this development will further enhance investor sentiments, which appear to have got a fresh dose of energy during the past two market days, after the Bourse lost Rs. 90 billion (largely on account of forced selling on margin calls) in value early in the week.

As reported in the Daily FT yesterday, New World Securities (NWS) said that return of foreign interest (as reflected by Rs. 179 million net inflow on Tuesday and Rs. 66 million on Wednesday) lifted the Bourse. “This positive sentiment will remain if the foreigners continue to pick value stocks,” NWS added.

This was reality yesterday as several foreign funds picked up bulk of the 8.8 million shares of JKH that traded for Rs. 1.46 billion accounting for 64% of the turnover. Yesterday’s net foreign inflow was Rs. 1.02 billion, highest recorded since 3 May 2011.

“We take this as a very positive sign, given the fact that, fresh funds have to play a vital role for the bourse to mark a turnaround,” Arrenga Capital said.



It said: “The Colombo Bourse saw the long-awaited positive signal as foreign buying returned strongly; picking on the heavyweight John Keells Holdings, which has been trading near its 52-week low over the past few weeks.”

JKH saw nine off-market negotiated deals during the last hour of trading, at a fixed price of Rs. 167 per share (4.4% premium to the previous closing price). The crossings accumulated to around 7.9 million shares, whilst the counter registered another parcel of 294, 500k shares being crossed off at Rs. 160.0 during early trading hours.

JKH closed at Rs. 163.40, up by 2.1% whilst with stellar third quarter results released yesterday after the market was closed, investors are likely to toast the premier blue chip when the market resumes today (Friday).

Arrenga said these last hour deals in the counter lifted the market from its dull sentiments as the turnover crossed the Rs. 2 billion mark first time in two months.

Indices, which were struggling searching for a direction, shot up with the renewed foreign participation as both the ASPI and MPI closed advancing by 36.1 (0.6%) and 21.5 points (0.4%) at 5,592.4 and 4,758.5 points respectively. The YTD performance of ASI however remains a negative 7.94%, though lower in comparison to Tuesday’s near 9%.

Another heavyweight, Commercial Bank also continued with interest as the counter too registered three blocks totalling to 3.6 million shares being crossed off at a set price of Rs. 100 share, which represented nearly a 2.3% stake in the counter.

Arrenga said following the deals, considerable buying interest was evident in the counter, as it closed marginally in the green.

Speculative drive continued in two finance sector players, Asia Asset Finance and Swarnamahal Financial Services, as both depicted volatile behaviour. The former, after trading between the range of Rs. 6.7 to Rs. 7.1, closed at Rs. 7.1 with a 9.2% advance. The latter saw its price climbing up further as it closed at Rs. 119.6 with a 4% gain.

Following the announcement of a proposal to effect a reduction in its stated capital, Blue Diamonds [Voting & Non-Voting], both saw their prices gliding down closing with losses of 6.3% and 8.1% respectively. Interest was also seen in Environmental Resources Investments, Ceylon Leather Products, Nation Lanka Finance and Ascot Holdings.