SC Securities Research Weekly Market Update

For the Week Ended 04th June 2021

All Share Continues its Growth Driven by Index Heavy Counters

ASPI, 31st May – 04th June

7,403.44 7,450.54 7,436.55 7,516.20 7,567.38

Up 70.02 Up 47.10 Down 13.99 Up 79.65 Up 51.18

S&P SL 20, 31st May – 04th June Source: CSE

2,978.81 3,002.31 3,000.92 3,025.76 3,046.47

Up 23.10 Up 23.50 Down 1.39 Up 24.84 Up 20.71

§ The ASPI rose 2.21% this week on the back of gains in the Capital Goods sector coupled with the Materials sector.
§ The S&P SL 20 rose 2.27%.
ASPI Over the Prior Month

§ We saw the All Share witness a dip and some low 7,600.00
sentiment over the past couple of weeks due to
the current Covid climate in the country. 7,500.00
§ However, last week, we saw the bourse gain on
7,400.00
the back of gains from index heavy counters such
LOLC, COMB and HAYL. 7,300.00
§ However, this week started off on a positive note
before a mid -week dip. This however was offset 7,200.00
by rebound that saw the All Share hit a six-week
7,100.00
high.
§ The gains were made driven by the Capital 7,000.00
Goods Sector and counters such as LOLC, CIC
COMB. 6,900.00
§ We expect the index to continue this trajectory
1

1
-2
-2

-2

-2

-2

with investor confidence clearly being robust

un
ay

ay

ay

ay
-M

-M

-M

-M

-J
02

despite continued lockdowns.

05

12

19

26

Source: CSE

Market News: CBSL Revises Rules on Repatriation of Export Proceeds Again

§ The CBSL decided to revert back to 25% conversion of export proceeds within 30 days of receipt.
§ Prior to the re-amendment, the rate was brought down to 10% in April from 25% in March.
§ However, at the discretion of the monetary board, they may allow certain businesses or industries to convert at
less than 25% if a very high portion of the imported goods cannot be sourced domestically. The floor level for such
businesses or industries has been set at 10%.
§ This is the latest move as the country grapples with saving reserves whilst also meeting foreign debt obligations.
§ We see this as a positive move for the Government as it alleviates some pressure in shoring up foreign currency
reserves.
 Sri Lanka Forex Market Remains Inactive as Long Tenure Bond Yields Remain Constant

Spot Rates

Current Previous Week Change

LKR/USD 199.69 199.56 +0.13
LKR/ GBP 281.60 283.09 -1.49
LKR/EUR 242.10 243.16 -2.06
LKR/JPY 1.81 1.82 -0.01

Source: CBSL
§ Sri Lankan Rupee bids closed without active quotes on Wednesday whilst gilt yields remained as the same levels.
§ There was a slight appreciation on short tenure bond yields as Bonds maturing 15/12/2022 closed at 5.67/77 up
from 5.63/70.
§ Long tenure bond yields remained flat.

Commodities: Copper Plummets Over Lower Demand from China

Current Previous Week Change

Oil, Brent (USD per Barrel) 71.14 69.29 +1.85
Gold (USD per Troy Ounce) 1,869.80 1,889.75 -19.95
Copper (USD per pound) 4.40 4.63 -0.23
Aluminium (USD per Tonne) 2,565 2,388 +177.0
Source: Gold Council, London Metal Exchange

§ Copper prices fell to a six-week low on the back of signs of weakening demand in China and expectations on
US job data.
§ Yangshan copper import premiums fell to 28.50 per tonne – the lowest since 2012.
§ Investors are also waiting on US jobs data that will be released today that will give some indication whether
monetary policy could tighten.
§ We believe that in the short-term, prices will be dictated by US job figures however, we expect prices to pick up
as we head into the last quarter of the year.
§ Gold also saw a 2% decline to its lowest level since May 2020 due to strong US service sector data propelled the
dollar higher. US gold futures were also down by 2%.
§ Oil continued its rally on Wednesday with experts predicting prices may rise to $80 per barrel or higher this
summer.
§ However, we feel this may be offset towards the end of the year on the back of US sanctions being eased with
Iran thus, freeing up a significant supply to the world market.

Global Markets Wrap: Markets Wait on US Jobs Data

§ Stock ended lower on Thursday as investors digested the news of Joe Biden being open to raising the level of
corporate tax from 21% to 28%.
§ European stocks were mixed as investors reacted to fresh economic data and looked ahead to key US job reports
later this week.
§ Asian markets were also mixed with benchmarks falling in Japan and South Korea but was partially offset by
increases in China and Australia.
§ Concerns still remain on our side with inflationary worries that continue to persist in the US.
 Notions on ASPI

Source: Investing.com
§ The daily chart for the ASPI indicates that the symmetrical pattern has been broken.
§ The RSI for the All Share closed at 66.21 – which is in the mid-range.
§ The index broke the previous daily resistance level of 7,450 – 7,500 making it a daily support now. The index is
trading above the daily support of 7,400 – 7,500 with strong bullish momentum. Therefore, the next daily
resistance level of 7,650 – 7,700 which is April 2021 high, could be tested again.
§ Furthermore, the index is trading above the 18 & 8 EMA levels – which indicates a bullish momentum.

Pick of the Week: LOLC

Source: Investing.com
§ LOLC broke the daily resistance of LKR 350 – LKR 355 making it a support level now.
§ The RSI for LOLC closed at 69.87 which is the mid-range.
§ As the price is trading above the daily support level of LKR 350 – LKR 355, the next area of daily resistance is at
LKR 390 – LKR 400.
§ Both 18 & 8 EMA’s indicates a bullish momentum since the price is trading above the EMA.
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