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Sri Lanka Equity Forum » Stock Market Talk » Eighty three CSE companies trading below 50% of book value

Eighty three CSE companies trading below 50% of book value

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kalu351


Senior Equity Analytic
Senior Equity Analytic
Eighty three CSE companies trading below 50% of book value
September 25, 2018, 8:07 pm 

By Hiran H.Senewiratne

It is said that out of 291  listed companies in the Colombo Stock Exchange (CSE), 185 companies are trading under their established book value. Of those 185 companies, 83 companies are trading in the market below 50 percent of their established book value, a top CSE official said.

"In this scenario it is an excellent opportunity for Sri Lankan investors to buy stocks from the CSE because currently most foreign investors are exiting Asian markets in order to invest in US stock markets with the increase in US interest rates, CSE- Head of Market Development  Niroshan Wijesundere told The Island Financial Review.

He said that that many people say that the CSE is falling, which is not at all true, but it is happening  throughout Asian markets. When one studies other markets, Chinese stock market has dropped by 15.9 percent, Philippines' market has dropped by 9.9 percent, MACI Frontier by 14.5 percent, and MACI Emerging by 10 percent. The CSE dropped by 8.4 percent, which is quite manageable once the global scenario bounces back, he said.

Wijesundere said that where the net foreign outflow is concerned, Sri Lanka is not that affected and so far US $ 34.6 million has gone out of the market, while in other major markets, including India, US $ 1.1 billion has gone out of their countries. Further, in case of Malaysia, US $ 2.5 billion has gone out of the country, South Korea, US$ two billion, Japan US $ 55 billion and Philippines US 1.5 billion, he added.

The Head of Marketing also said that price earning valuation wise the CSE is a bit fine compared to other countries in the Asian region. In this respect, Sri Lanka is the least affected, which is 8.5%, while Hong Kong 10.4% and South Korea 11.3%.

Under these circumstances, buying stocks from the CSE is quite prudent at this juncture  because those stocks, especially those of blue chip companies, tend to appreciate  from medium to long term perspective, Wijesundere explained.

Further, in currency deprecation also the Sri Lankan situation is quite manageable because it records depreciation by only 9.12%, while in the case of India it is 12.04%, he said.

Amid those developments, the CSE's both indices yesterday recorded downward trends, ie, the All Share Price Index by 71.32 points and S and P SL20 37.47 points. The day's turnover stood at Rs. 298,134,866.00. During the day, 10.67 million shares traded. Meanwhile, Mackwoods Energy PLC  trading was suspended until an  independent  audit report opinion, market sources said. CSE shares dropped to their lowest close in more than 30 months yesterday  as foreign investors sold  stocks in many blue chip companies  while a weaker rupee dented investor sentiment as well.

Meanwhile, JKSB reports -

ASPI: 5,833.58 (-71.32 pts; -1.21%); Val T/O: Rs. 298mn (US$1.77mn); Vol T/O: 10.6mn; Trades: 3,698

Advance/decline ratio: 42/149; Top gainer: SEMB.X (+50.00%) ; Top loser: PCHH.N (-20.00%)

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