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Atchuthan Srirangan, Assistant Manager – Research at First Capital commenting on the bond and stock market performance – 09.12.2019

Atchuthan Srirangan, Assistant Manager – Research at First Capital commenting on the bond and stock market performance.

“Commencing the week, the secondary market yield curve remained broadly unchanged while overall market witnessed thin volumes. Bourse ended the day in red thus persisting the negative sentiment for the fifth straight trading session, predominantly dragged down by the price losses in JKH and HHL.”

First Capital is an investment bank offering services as Stock Brokers in Sri Lanka. The Company acts as a conduit between retail and institutional clients and the secondary market of the Colombo Stock Exchange. First Capital’s best-in-class research team provide a series of actionable trade recommendations, daily and periodic market commentaries and publications for Stock Brokers in Sri Lanka.

First Capital Holdings PLC is an investment bank and is the pioneer non-bank affiliated Primary Dealer in Treasury Bills and Bonds in Sri Lanka. With a track record of over 25 years, the Company was the first licensed primary dealer appointed by the Central Bank, and is also the only listed and rated primary dealer in Treasury Bills and Bonds in Sri Lanka.
First Capital delivers the only source for fixed income research in the local financial services industry. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis.

Construction sector shares to scale new highs

Upbeat on the hope of an impending construction boom, considerable demand for new buildings and infrastructure such as roads and highways saw the construction sector shares on a heavy stockmarket rally by retailers on the run up to the Presidential elections and immediately after President Gotabaya Rajapaksa’s win.

The excitement has now subsided to an extent owing to profit-taking but these stocks are in their radar – especially after Mr. Rajapaksa managed to convince India to extend a US$ 400 million line of credit to improve infrastructure and economy in the country.

Most local players continue to be largely optimistic about the future of the construction industry in Sri Lanka, in large part due to the government’s ambitious spending plans, a sector analyst commented. While the government has invested heavily in developing infrastructure since 2009 – after the war, much work remains to be done, particularly in the areas of road development, he said.

As per published statistics, more than 90 per cent of construction activity through 2012 was state-led. Now saddled with an economy where growth has slowed to a five-year slump of 1.6 per cent in the quarter ended June, and which has a debt level perched at 83 per cent of GDP, the new government is to restart abandoned projects with the same zeal pre-2015.

The Ministry of Transport and the Ministry of Higher Education and Highways in those days for example, have carried out a substantial amount of road and expressway development and refurbishment. The government in 2010 and 2014 built around 160 km of new expressways and 240 km of new roads, most of which fell under the umbrella of its 10-year National Road Master Plan, which was launched in 2007, another analyst said.

Sri Lanka still has some way to go in the infrastructure sector which augurs well for the construction industry and investors are set to witness a strong construction sector growth in 2020 with the expected stabilisation in the political and economic front with the cut in corporate taxes, VAT and NBT to boost its growth, analysts say.

The construction sector could restart energising the overall economic growth from 2020 due to the lower corporate tax rate of 14 per cent for the sector and ease in VAT and cancellation of NBT with continued input from private sector led infrastructure projects and lower interest rates steering the home builders market. As such, firms such as Access Engineering PLC’s order book will be augmented by revenue which could flow in through sub-contracting work from the Port City and Chinese-funded phases of the Central Expressway where Phase III will begin next year.

The JICA-funded Light Rail Transit Project Phase I and airport terminal expansion project is also in the pipeline for the company.

Along with the Ratnapura Expressway, Chinese-funded Polonnaruwa water supply project, expansion of Kadawatha Nittabuwa Road Project and construction of flyovers in Colombo and Kandy, the company will turn in better profits, analysts believe.

For real boost in the construction sector, there has to be a retail housing construction boom, some analysts opine. Initially in the first three months of next year, F&B related firms will do well as demand for those will augment and consumer demand for vehicles and housing will come next, Dimantha Mathew, Head of Research at First Capital told the Business Times. “This will happen quarter by quarter and we expect that construction sector boom will happen in about nine months’ time,” he added.

Weekly Yield Movement & Volume

First capital


The secondary market yield curve shifted slightly upwards on the belly end of the curve while short and long tenure maturities remained broadly unchanged. Activities were mainly centred on 2021, 2023, 2024, and 2027 maturities.
At  the  monetary  policy  announcement,  CBSL decided to maintain its policy rates at current levels of 7.00% (SDFR) and 8.00% (SLFR) respectively.
At the weekly Treasury Bill auction, the 6M Bill and benchmark 1-Yr saw yields declining by 7bps each to 7.60% and 8.22%, respectively, while the 3M Bill remained unchanged.


Meanwhile, in the forex market, the rupee depreciated to close the week at LKR 181.24 from LKR 180.94 held at the beginning of the week.


Liquidity & CBSL Holdings


Volatility  in  liquidity  was  witnessed  although  itv remained positive during the week. The highest excess liquidity for the week was recorded on 28th Nov amounting to LKR 46.0Bn. Meanwhile, CBSL holdings slightly declined to close at LKR 77.4Bn.


Foreign Interest


Foreign holding in Government Securities increased vby LKR 4.3Bn to record at LKR 120.8Bn while foreign holding percentage increased to 2.2%.
Maturities for next week
The  government  security  market  has  to  settle  a Treasury Bill maturity amounting to LKR  27.3Bn during the week ending 13 Dec 2019

Atchuthan Srirangan, Assistant Manager Research at First Capital commenting on the bond and stock market performance – 05.12.2019

Atchuthan Srirangan, Assistant Manager Research at First Capital commenting on the bond and stock market performance.

“The secondary bond market yield curve remained broadly unchanged while overall market witnessed moderate volumes during the day. Share market ended in red for the second consecutive trading session mainly dragged down by the price losses in JKH and MELS.

First Capital is an investment bank offering services as Stock Brokers in Sri Lanka. The Company acts as a conduit between retail and institutional clients and the secondary market of the Colombo Stock Exchange. First Capital’s best-in-class research team provide a series of actionable trade recommendations, daily and periodic market commentaries and publications for Stock Brokers in Sri Lanka.

First Capital Holdings PLC is an investment bank and is the pioneer non-bank affiliated Primary Dealer in Treasury Bills and Bonds in Sri Lanka. With a track record of over 25 years, the Company was the first licensed primary dealer appointed by the Central Bank, and is also the only listed and rated primary dealer in Treasury Bills and Bonds in Sri Lanka.
First Capital delivers the only source for fixed income research in the local financial services industry. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis.

Participant of First Capital and Kelsey Homes attend the Annual Young Forum conducted for the Dunamis Capital Group.

Young Forums were conducted for the year 2019 giving a hearing to the young leaders consisting of the millennials to gather their views, thoughts and ideas to improve business practices and the corporate culture of the Dunamis Group.

Caption – Managing Director First Capital, Director / CEO First Capital and Head of HR seen engaging with the participants.

Dimantha Mathew, Head of Research at First Capital commenting on the bond and stock market performance – 04.12.2019

Dimantha Mathew, Head of Research at First Capital commenting on the bond and stock market performance.

“The secondary market yield curve remained broadly unchanged while overall market witnessed moderate volumes during the day. Bourse ended in red for the second consecutive trading session mainly dragged down by the price losses in JKH and MELS. Foreigners were net sellers amidst low foreign participation. “

First Capital is an investment bank offering services as Stock Brokers in Sri Lanka. The Company acts as a conduit between retail and institutional clients and the secondary market of the Colombo Stock Exchange. First Capital’s best-in-class research team provide a series of actionable trade recommendations, daily and periodic market commentaries and publications for Stock Brokers in Sri Lanka.

First Capital Holdings PLC is an investment bank and is the pioneer non-bank affiliated Primary Dealer in Treasury Bills and Bonds in Sri Lanka. With a track record of over 25 years, the Company was the first licensed primary dealer appointed by the Central Bank, and is also the only listed and rated primary dealer in Treasury Bills and Bonds in Sri Lanka.
First Capital delivers the only source for fixed income research in the local financial services industry. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis.

Hiruni Perera, Senior Research Analyst at First Capital commenting on the bond and stock market performance – 03.12.2019

Stock Brokers in Sri Lanka

Hiruni Perera, Senior Research Analyst at First Capital commenting on the bond and stock market performance.

“In the bond market yield curve remained broadly unchanged amidst mixed activities while overall market witnessed thin volumes ahead of the tomorrow’s bill auction. Stock Market concluded the day in red predominantly dragged down by SLTL and CTC, negating the positive sentiment witnessed in previous five trading sessions.”

First Capital is an investment bank offering services as Stock Brokers in Sri Lanka. The Company acts as a conduit between retail and institutional clients and the secondary market of the Colombo Stock Exchange. First Capital’s best-in-class research team provide a series of actionable trade recommendations, daily and periodic market commentaries and publications for Stock Brokers in Sri Lanka.

First Capital Holdings PLC is an investment bank and is the pioneer non-bank affiliated Primary Dealer in Treasury Bills and Bonds in Sri Lanka. With a track record of over 25 years, the Company was the first licensed primary dealer appointed by the Central Bank, and is also the only listed and rated primary dealer in Treasury Bills and Bonds in Sri Lanka.
First Capital delivers the only source for fixed income research in the local financial services industry. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis.

Atchuthan Srirangan, Assistant Manager – Research at First Capital commenting on the bond and stock market performance – 02.12.2019

Stock Brokers in Sri Lanka

Atchuthan Srirangan, Assistant Manager – Research at First Capital commenting on the bond and stock market performance.

“In the bond market during morning hours of trading, with local buying interest, secondary market yield curve shifted downwards although foreign selling shifted yields upwards. Stock market closed on a mixed note while the benchmark index, ASPI, remaining in the positive territory for the fifth straight session.”

First Capital is an investment bank offering services as Stock Brokers in Sri Lanka. The Company acts as a conduit between retail and institutional clients and the secondary market of the Colombo Stock Exchange. First Capital’s best-in-class research team provide a series of actionable trade recommendations, daily and periodic market commentaries and publications for Stock Brokers in Sri Lanka.

First Capital Holdings PLC is an investment bank and is the pioneer non-bank affiliated Primary Dealer in Treasury Bills and Bonds in Sri Lanka. With a track record of over 25 years, the Company was the first licensed primary dealer appointed by the Central Bank, and is also the only listed and rated primary dealer in Treasury Bills and Bonds in Sri Lanka.
First Capital delivers the only source for fixed income research in the local financial services industry. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis.

Sri Lanka expects 3.025 billion USD stimulus from tax reliefs

COLOMBO, Nov. 30 (Xinhua) — Wide-ranging tax relief measures undertaken by the new Sri Lankan government are expected to provide a fiscal stimulus of 550 billion Rupees (3.025 billion U. S. dollars) to the economy, State Minister of Investment Promotion, Keheliya Rambukwella, quoted by local media reports, said here Satuday.

Speaking to journalists in capital Colombo, Rambukwella said the previous government had increased government revenue from Rs. 1 trillion to Rs. 2.2 trillion, providing space for the new government to provide a stimulus through tax reliefs without compromising fiscal management.

“With the current state of the economy, this country can no longer depend on loans and facilities. We need to attract direct investments whereby we will stabilise the rupee, look into unemployment and budget deficits to bridge the gaps as far as possible,” he said.

Financial analysts have noted that Sri Lankan shares and the Sri Lankan rupee ended higher after the tax relief measures were announced. Atchuthan Srirangan, assistant manager-Research for Investments at First Capital Holdings, said that consumer demand will see a boost in the coming months due to reduced taxes on goods and services.

“In the coming months, money liquidation will increase in the market and generate GDP growth. We can also expect lower inflation brackets due to reductions in prices,” Srirangan said.

On Nov. 27, Sri Lanka announced wide ranging tax reliefs including a reduction of Value Added Tax from 15 percent to 8 percent and reduction of telecommunications levies from 30 percent to 5 percent. Strategic sectors such as agriculture, fisheries, livestock and IT were made tax exempt while taxes on the construction industry were reduced from 28 percent to 14 percent

Wide ranging tax reliefs were key promises in the election manifesto of President Gotabaya Rajapaksa. (1 Sri Lanka Rupee equals 0.0055 U. S. dollar)

Weekly Govt Securities Market: Volatile yields amidst policy announcement

By First Capital Research
Weekly Yield Movement & Volume
The secondary market yield curve remained broadly unchanged, although there was an upward shift in mid tenor maturities amidst selling interest as a result of profit-taking. Activities were mainly centred on 2021, 2024, and 2027 maturities. On 27 Wednesday’s after-hours of the secondary market, the Cabinet announced number of tax reliefs to both individuals and corporates with the intention of providing a boost to the economy.
At the weekly bill auction held on Friday (29) both six-month and one-year bills increased by 9bps and 7bps to 7.67 per cent and 8.29 per cent, respectively, while the three-month bill dipped by 2bps to 7.45 per cent.In the forex market, the rupee depreciated to close the week at Rs 180.9 from Rs 179.99 held at the beginning of the week.


Liquidity & CBSL Holdings

Volatility in liquidity was witnessed, although it remained positive during the week. The highest excess liquidity for the week was recorded on 27 November, amounting to Rs 39.1 billion. Meanwhile, CBSL holdings slightly declined to close at Rs 77.8 billion.
Foreign InterestForeign holding in Government Securities remain unchanged to record at Rs 116.5 billion, while foreign holding percentage remained unchanged at 2.1 per cent.
Maturities for next week
The Government Security Market has to settle a Treasury Bill maturity amounting to Rs 23.4 billion during the week ending 6 December 2019.
Daily Summary
Thursday (21.11.19): The secondary market yield curve shifted slightly upwards with profit taking, while the overall market witnessed limited activity amidst moderate volumes. Short tenor [01.05.21], [01.08.21] and [15.12.21] traded in the range of 8.50-8.60 per cent levels, while 2023 maturities ([15.03.23], [15.05.23] and [15.07.23]) traded at 9.05-9.25 per cent levels. In addition, [15.06.24] traded at 9.43-9.50 per cent levels and long tenor maturity [15.10.27] traded at 9.80-9.82 per cent levels.
Friday (22.11.19): The secondary market yield curve witnessed an upward shift in the short and long end of the yield curve, while the overall market witnessed low volumes. With selling interest, short tenors [01.05.21], [15.10.21] and [15.12.21] saw yields reaching intra-day highs of 8.55 per cent, 8.70 per cent and 8.75 per cent, respectively. In the belly end of the yield curve, amidst mixed activities, [15.05.23] and [15.07.23] saw yields trading in the range of 9.15-9.18 per cent, while [15.06.24] and [15.09.24] traded in the range of 9.50-9.55 per cent. Long tenor, [15.01.27] and [15.10.27] traded in the range of 9.82-9.90 per cent, led by selling interest.
Monday (25.11.19): The secondary market yield curve witnessed an upward shift in the mid and long end of the yield curve, while overall market witnessed low volumes. With the selling interest, mid tenors [01.09.23] and [15.12.23] traded at 9.35 per cent and 9.45 per cent, respectively, while [15.03.24], [15.06.24] and [15.09.24] saw yields trading in the range of 9.50-9.62 per cent. Moreover, [15.01.27], [15.06.27] and [15.10.27] traded between 9.85-10.00 per cent.
Tuesday (26.11.19): The secondary bond market yields continued the upward sentiment in mid and long tenor maturities amidst selling interest, while the overall market witnessed moderate volumes. In the belly end of the yield curve, [15.03.24] traded at 9.70 per cent, [15.06.24] between 9.60-9.70 per cent and [15.09.24] traded in the range of 9.64-9.75 per cent. Moreover, [15.01.27] traded at 10.10 per cent, while [15.06.27] saw its yields trading between 10.10-10.15 per cent. [15.10.27] traded at 10.00-10.05 per cent. In the long end of the yield curve [15.03.28] maturity traded between 10.10-10.20 per cent.
Wednesday (27.11.19): In the morning hours, selling interest in the short end of the yield curve saw [01.05.21] at 8.65 per cent. In the belly end of the yield curve, [15.07.23] and [15.06.24] traded at 9.35 per cent and 9.75, respectively. Long tenor, [01.08.26] and [15.10.27] traded in the range of 10.0-10.10 per cent led by selling interest.

Meanwhile, at the weekly bill auction, both six-month and one-year bills increased by 9bps and 7bps to 7.67 per cent and 8.29 per cent, respectively, while the three-month bill dipped by 2bps to 7.45 per cent. With buying interest, [15.06.24] and [01.08.26] yields dipped to 9.70 per cent and 9.95 per cent, respectively, during the latter part of the day. During after-hours of the secondary market, the Cabinet had announced a number of tax reliefs to both individual and corporates.