April 24, 2019 (LBO) - Sri Lanka's stocks seemed to find their footing by the close of today's trading with the major indices finishing slightly up on relatively heavy volume.
Most of the day's trading was centered around market heavyweight John Keells Holdings (JKH), which traded close to 1% of its total outstanding shares worth approximately US$10mn. Trading in JKH amounted to almost 90% of the total trading on the Colombo Stock Exchange.
In a surprising development, foreign institutions came in an snapped up shares of JKH, which had dropped over 5% on the previous session. In the total market statistics, foreign Institutions purchased US$10mn worth of shares on the day, while selling less than US$3mn. Net foreign buying of US$7mn surprised the marketplace as many expected to see large scale foreign selling after the Easter Sunday terror attacks.
JKH has seen significant foreign selling over the last several months, making it even more surprising that they would come in and accumulate shares of the company during a period of heightened risk in the country.
The reduced price point of JKH stock (Rs140/share) after the terror related selloff, and the relative stability of the currency and macroeconomic indicators, seem to have led to the emergence of foreign buyers of the stock.
Despite today's stability in the stock market, investors are still nervous of further selling due to margin calls and deteriorating investor sentiment. Stocks are cheap with the market PE of just 8.5, and price to book of close to 1.
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However, analysts say that the earnings backdrop is uncertain in the near term.
Foreigners surprisingly buy shares of JKH after Sri Lanka’s Easter terror
