Profit-takings by foreign investors dampen CSE trading

By Hiran H.Senewiratne

CSE trading activities registered some negative performances at the beginning of sessions yesterday due to profit takings, especially by foreign investors. Foreign investors had panicked over stock market trends mainly due to foreign media highlighting that Sri Lanka had declared a food emergency with the worsening of the foreign currency reserve position of the country, stock market analysts said.

Last Friday the net foreign outflow was Rs. 1.5 billion, out of which Rs. 1.3 billion was from Hemas Holdings. However, yesterday too foreign outflows were noted. Under these circumstances a Rs. 50 billion net foreign outflow has been reported to date in the stock market, analysts said.

The main causes for the increasing foreign outflow are the depreciation of the rupee against the dollar and the worsening of the foreign reserve crisis, which created a gloomy picture of the market, analysts explained.

Amid those developments both indices moved downwards. The All Share Price Index went down by 80.65 points and S and P SL20 declined by 39.53 points. Turnover stood at Rs. 7.7 billion with one crossing. That crossing was reported in Sunshine Holdings Ltd, which crossed four million shares to the tune of Rs. 102 million, its shares traded at Rs. 25.50.

In the retail market, five companies that mainly contributed to the turnover were, Expolanka Holdings Rs. 2.3 billion (12.5 million shares traded), Browns Investments Rs. 1.14 billion (103.6 million shares traded), Hemas Holdings Rs. 911 million (12.5 million shares traded), LOLC Holdings Rs. 424 million (692,000 shares traded) and Kotagala Plantations Rs. 235 million (41.9 million shares traded).

Kotagala Plantations rights were listed yesterday. Under this right issue 263 million shares will be issued to raise Rs. 789 million. The ratio of the right issue was seven new shares for every two existing shares for shareholders. During the day 874 million share volumes changed hands in 47000 transactions.

Proving that investing in shares is becoming broad-based as opposed to the misconception of being “limited to a few”, the number of accounts has seen a 55 percent increase between 2010 and June 2021 while trading volumes have grown at a higher pace in tandem with improved sentiment.

The number of Central Depository System (CDS) accounts as of end June 2021 was 659,578 (excluding multiple registrations), up 55.4% from 424,288 in 2010 and by 14% in 2014. These two years saw significant bull runs.

The number of local companies having CDS Accounts has risen by 85 percent between 2010 and June 2021 from 6,114 to 11,294. Even between 2014 and 2021 June, the growth in companies at 31per cent is higher (though from a low base) as opposed to individuals.

More foreign companies have also registered to invest in Sri Lanka, from 3,893 in 2010 and 4,705 in 2014 to 5,718 in 2021 YTD.