First Capital Equities (Private) Limited

Market Indices
ASI

Daily
27th 2013 16th September August 2013
Market Performance
ASPI S&P SL 20 Turnover (mn) Foreign Purchases (mn) Foreign Sales (mn) Traded Companies Market PER (X) Market Cap (LKR bn) Market Cap (US$ bn) Dividend Yield (%) Price to Book (X) 27.09.2013 5,809 3,210 409.1 110.0 18.5 236 16.5 2,392 17.9 2.7 2.2 26.09.2013 5,786 3,219 920.2 267.3 34.1 234 16.5 2,383 17.8 2.7 2.2 %Chg. 0.4 -0.3 -55.5 -58.9 -45.6 0.9 0.4 0.4 0.4 0.0 0.4
3,400 3,200

S&P SL20

6,000 5,800 5,600

ASI S&P SL20

5,400
25/09/2013 26/09/2013

3,000
27/09/2013
23/09/2013 24/09/2013

MARKET WATCH

Market Outlook
The market edged upwards today gaining 0.4% to close the session at 5809. Turnover recorded LKR 409.1mn with trading in Piramal Glass and John Keells Holdings accounting for 28.7% of the days total. Gainers modestly outpaced losers with Citrus Leisure(W0019), PC House and Serendib Engineering rising by 29.4%, 25.0% and 23.4% and offsetting losses in Cargo Boat Develoment, John Keells PLC and Namal Acuity Value Fund(U) which declined by 8.2%, 7.3% and 7.0% respectively. Asian stock markets meanwhile edged higher today after Wall Street shook off a losing streak, although Japan lagged in the red as a weak inflation reading kept buyers at bay.
12 Debenture flurry continues Notwithstanding our expectation of a further decline in interest rates, companies appear to continue to raise capital via debenture issuances. Total capital raised on an YTD basis has crossed the LKR 30.0bn mark so far and with more and more corporates opting to generate funds via the debenture route, the likelihood of more debenture issues to be announced during the remainder of the year is a possibility. While the efficacy of corporate borrowing via debentures may depend on how these funds are indeed utilized; i.e, whether to fund capex (or retirement of debt etc), we believe that considering the relatively high interest rates that have been offered, issuing companies may need to be vigilant of overly excessive debt levels on their balance sheets and consequently pressure on margins as the majority of these debentures appear to have been offered at interest rates well above that of benchmark rates.

Turnover Composition & Net Foreign Flows

18,000

27%
LKR Mn

15,000

12,000 9,000
6,000

73%

3,000 0

Foreign

Domestic

-3,000

YTD

MTD

WTD

Gainers /Losers (%)

Sunshine Holdings Namal Acuity Value Fund(U)

-5.3 -7.0 -7.3

John Keells PLC

Cargo Boat Development Co. Colombo Fort Investments Serendib Engineering PC House

-8.2 22.1
23.4

Citrus Leisure (W0019)

25.0 29.4

Market Outlook (Cont.)

continue unabated notwithstanding our expectation of a rise in inflation pressures due to cost push factors caused by high global commodity prices. We consequently advise investors to take advantage of any price weakness and accumulate positions in fundamentally strong counters. While we remain Overweight on the Food and Beverages, Banking, Diversified and Hotels sectors, we emphasize the need for a careful bottom up stock selection strategy to identify stocks that within these sectors that would outperform.

Market Trajectory Although we view market opportunities mainly from a bottom-up perspective, at a macro level, economic growth is likely to

BRICS Performance Vs ASPI (YTD dollarised)

0.0%

Market Liquidity (Turnover)

1200 900
LKR Mn

-8.0%

600 300
23/09/2013 24/09/2013 25/09/2013 26/09/2013
27/09/2013

-16.0%

0
-24.0%

Brazil

Russia

India

China

South Africa

Sri Lanka

Global Markets
Sri Lanka - ASPI India - Sensex Pakistan - KSE 100 Taiwan Weighted Singapore - Straits Times Hong Kong - Hang Seng S&P 500 Euro Stoxx 50 MSCI Asia Pacific

Index 5809 19,727 22,740 8,231 3,210 23,207 1,699 2,908 141

%Chg. 0.39 -0.84 -0.18 0.56 0.50 0.35 0.35 -0.50 0.12

Interest Rates & Currencies

Prime Lending Rate (Avg. Weighted) Deposit Rate (Avg. Weighted) Treasury Bill Rate (364 Days) Dollar Denominated Bond Rate Inflation Rate (YoY) LKR/US$ (Selling Rate) LKR/EURO (Selling Rate) Gold (USD/oz) Oil (Brent) (USD/barrel)

27.09.2013 11.87% 10.10% 10.57% 5.88% 6.30% 133.64 180.88 1,323.80 108.89

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