EconomyNext – Foreign investors in Sri Lankan stocks turned net sellers in the third quarter of 2014 when the Colombo bourse made its highest gains of the year, according to an analysis done by a stock broker.
The benchmark All Share Price Index of the Colombo stock market rose 873.52 points (13.7 percent) in the third quarter to close at 7,252.14 compared with the previous quarter.
"The Colombo bourse maintained the optimistic momentum in the third quarter amid high investor participation," Lanka Securities said in a report.
Market turnover for the quarter was 121 billion rupees, up 92 percent compared to the previous quarter while volumes improved 74 percent to 5.7 billion shares and daily average turnover improved to 1.9 billion rupees.
"Foreign investors were net sellers with (an outflow of) 1.8 billion rupees," Lanka Securities said. "Foreign participation stood at 24 percent during the third quarter."
The first quarter of the year when the ASPI advanced by 55.53 points (0.94 percent) also saw a net foreign outflow of 6.8 billion rupees with foreign participation of 35.5 percent.
Net quarterly earnings of listed firms declined by two percent during the first quarter of the year compared to the previous quarter. Market turnover for the quarter was 52.64 billion rupees while daily average turnover stood at 908 million rupees.
"Equities gained notably in the second quarter amid strong foreign participation," Lanka Securities said.
The main index gained 410.31 points or 6.9 percent while the S&P SL20 index, which tracks the top 20 largest and most liquid stocks on the CSE, gained 254.51 points or 7.8 percent.
Market turnover was 63.1 billion rupees, which was a 20 percent quarter-on-quarter growth compared to the first quarter.
The daily average turnover improved to 1.1 billion rupees with foreign investors net buyers for the quarter with a net foreign inflow of 13.10 billion rupees. Foreign participation was 35.3 percent.
Quarterly earnings rose by 22 percent during the second quarter compared with the first with mainly investment companies, utilities, technology and consumer services sector earnings contributed positively to the earnings, Lanka Securities said.
The foreign sell-off came in the third quarter when the S&P SL20 index passed the 4,000 mark and closed at 4,038.30 with a gain of 503.87 points (14.3 percent).
The market lost its momentum in the last quarter of the year owing to political uncertainties caused by the announcement of a snap presidential poll for January 8, 2015, two years ahead of schedule, followed by defections from the government to the opposition.
Stock market marginally increased in the fourth quarter and foreign investors were net buyers of 15.1 billion rupees worth of equities. Foreign participation for the quarter was 22 percent.
"Lack of direction in the market affected investor participation," the Lanka Securities report said.
The main index managed to gain 46.81 index points or 0.65 percent to close at 7,298.95 while S&P SL20 index gained 50.84 points (1.26 percent) to end at 4,089.14.
Market turnover for the quarter was 104 billion rupees (down 14 percent from the previous quarter) while market volume declined by nine percent to 5.2 billion shares over the same period. The average daily turnover dropped to 1.8 billion rupees.