ECONOMYNEXT – The market value of a stock portfolio at Sri Lanka’s Employees’ Provident Fund (EPF) grew 10.8 percent in the September quarter to 59.9 billion rupees, faster than a 6.8 percent gain in the stock market, central bank data showed.
There were some additions to the portfolio through rights issues and stock dividends, but the fund has largely stayed out of the market during the quarter.
The central bank managed fund, the largest in the country, has 2.3 trillion rupees in assets, of which 3-4 percent are in equity.
The purchased cost of stocks rose marginally to 83 billion rupees due to scrip dividends from Central Finance Company Plc and People’s Leasing & Finance Plc and rights issued by Sampath Bank Plc.
The stocks which gained the most market value in the EPF portfolio were Hayleys Fabric (up 76 percent), Tokyo Cement Lanka Plc non-voting (up 54.6 percent), Mackwoods Energy Plc (up 53.8 percent) and CIC Holdings Plc non-voting (up 50.9 percent), all of which were minor investments for the fund.
In absolute terms, the three largest listed banks; Commercial Bank Plc, Hatton National Bank Plc and Sampath Bank Plc, as well as the largest non-bank finance firm LOLC Holdings Plc, added most (2.7 billion rupees) to the market value of the EPF’s equity portfolio.
The EPF had become active in the market with buying for the first time since 2011 during the June quarter, when stocks valuations were at a seven-year low after the Easter Sunday bombings.
With Colombo’s stocks falling over 7 percent in the two weeks after the bombings, the EPF’s entrance into the market in mid-May triggered the recovery seen so far in the market. Colombo’s All Share Price Index recovered from the 5,199 point low in mid-May to 5,946 on Monday.
During the June quarter, the EPF had bought into the telco Dialog Axiata Plc and knit fabric manufacturer Teejay Lanka Plc.
Central Bank Governor Indrajit Coomaraswamy had indicated in November 2018 that the EPF was looking to enter the stock market, since its largest investments in treasury bonds will be wound down as the government’s debt requirements decline.
After the EPF re-entered the stock market in May, Coomaraswamy said that plans were afoot to cautiously double the fund’s equity portfolio up to 6 percent of total assets through investments in a small list of stocks. (Colombo/Oct28/2019)