Market declines on polls violence

With the election for the 6th Executive President scheduled for the 26th of January 2010, investors took positions with caution. As this is expected to be a close election, there were no big bets on the outcome, but polls related violence had a telling effect on investor sentiment. The high level of violence, if it continues after the election, will have an immediate negative effect on the tourism industry, and foreign direct investment down the line. For the week ending on the 22nd January, the indexes declined on three of the five market days with foreign sales exceeding purchases by Rs 1.04 billion. Foreign purchases came to Rs 477 billion while sales came to Rs 1.5 billion. Daily average turnover was Rs 1.2 billion, down from the Rs 1.5 billion from the previous week. This week’s total turnover was Rs 6.1 billion. The ASI Index, which tracks the movements of all 231 companies in the CSE, declined 31 points or 0.9% to end at 3,532. The MPI, which tracks the movements of the 25 most liquid stocks, lost 54 points or 1.3 percent to end the day at 4,045.
Corporate actions also drove market turnover with Colombo Fort Land & Building Ceylon purchasing 56.5% stake in CW Mackie through its subsidiaries on Friday. The stake was made up of 30% that was held by Aarhus United of Denmark and 26.5% that was held by Ceylon Trading Co. The stakes were bought by Lankem Ceylon (36.7%) and Kotagala Plantations (19.8%). CFLB group has over a dozen listed companies and unlisted companies and has foothold in the manufacturing, leisure, trading, investment, property, motor sectors. This makes CFLB the company with the largest number of listed companies in the Colombo bourse. At the purchase price of Rs 35.00, the purchase consideration came to Rs 712 million and Lankem Ceylon and Kotagala Plantations are expected to make a mandatory offer to the minority shareholders forthwith. Lankem Ceylon closed the day at Rs 48.25, Kotagala Plantations closed at Rs 33.75 and Colombo Fort Land & Building closed at Rs 33.00. CW Mackie is an old established trading organization more famous for its Sunquick brand of drinks and Jumbo brand of peanuts. Also on Friday Ceylon Tea Brokers announced plans to raise Rs 28 million by way of an IPO by issuing 14 million shares at Rs 2.00 per share. The IPO is slated to open on the 16th of February. Ceylon Tea Brokers is a unit of Capital Alliance Holdings and was formerly known as De Silva and Abeywardena Commodity Brokers.
On Thursday, John Keells Hotels announced a one for three rights issue at a price of Rs 10.00. The company plans to raise Rs 3.6 billion to refurbish its existing hotel properties and build new hotels. The week also saw DFCC Bank and Hatton National Bank sell their respective stakes, a total of 78.3% to Acuity Partners. At the end of the week, DFCC Bank closed down 50 cents to Rs 167.00, while Hatton National Bank closed down by Rs 3.50 to Rs 171.75. HNB’s non-voting shares closed down 25 cents to Rs 113.25. Commercial Bank was down Rs 8.00 to Rs 185.00, while its non-voting shares were down 50 cents to Rs 126.00. NDB Bank closed the week down Rs 4.75 to Rs 202.25 and Sampath Bank closed at Rs 217.00. Of the diversified companies, John Keells Holdings closed at Rs 173.75, down Rs 5.25, Aitken Spence Holdinsg closed at Rs 1,251.00, down Rs 1.25, Carson Cumberbatch and Co down 36.75 to Rs 503.25 and Ceylon Theatres down Rs 1.00 to Rs 54.00. Hayleys gained for the week, up 50 cents to end at Rs 186.25, on the back of the strong performance of the shares of its subsidiary Haycarb. The activated carbon manufacturing specialist’s shares gained Rs 21.50 for the week to close at Rs 191.25. Richard Pieris and Co gained Rs 5.50 to close at Rs 44.25, whereas Hemas Holdings closed at Rs 123.75.