External shock-driven panic-selling sees S&P SL 20 index crash by 5% within 15 minutes of trading, triggering circuit breaker, suspension of market for half an hour
Previous occasion when CSE saw circuit breaker was almost a decade ago
All Share Price Index plunges to near 8-year low; now down 16.4% year to date and S&P SL 20 index down near 20%
Ceylon Cold Stores, JKH, CTC, Dialog, SLT key contributors to crash in indices
Foreigners sold most in JKH, Hemas
Brokers mixed over how market behaved; lower oil prices bode well for Lankan economy
Analysts claim foreign investors sense weakening of rupee
The Colombo stock market yesterday saw Rs. 103 billion in value wiped off with the key price index plunging to a near 8-year low after external shocks-led panic-selling triggered the circuit breaker of S&P SL 20 index, forcing market halt for half an hour.
In a day of heightened concern and confusion, the market opened after the Poya holiday on Monday only to suffer a 5% crash of the active S&P SL20 index within 15 minutes of trading. The crash was largely influenced by how global markets reacted on Monday, after oil prices suffered its sharpest drop since the 1991 Gulf war, following action by Saudi Arabia as well as more adverse developments on the coronavirus epidemic.
The crash of S&P SL20 resulted in a market halt for 30 minutes, and both indices continued to decline thereafter. The previous occasion the market saw a circuit breaker was on 12 October 2010.
The ASPI decreased by 4.14% or 221.24 points to close at 5,121.91, lowest in seven and half years. The S&P SL20 Index dipped by 4.75% or 117.86 points.
As of Friday, the ASI was down 13% and S&P SL20 was lower by 15.5%. Yesterday ASPI was down 16.4% year to date and S&P SL 20 was nearing 20%. Last week ASPI, dipped by 4.5% on account of a 2% decline on Friday.
Market capitalisation which was Rs. 2.48 trillion on Friday, was down to Rs. 2.38 trillion yesterday, reflecting a dip of Rs. 103 billion. Year to date decline of market capitalisation was 16.5% higher from 13% as of Friday.
The major contributors to the crash were Ceylon Cold Stores (21%) after it fell 13.6% and premier blue chip JKH (20%) as its share price dipped by 5.1% or Rs. 7.10 to close at Rs. 133. CTC contributed 11% to the dip in ASPI and 10.5% each by Dialog and SLT.
Panic-selling and exit by foreigners boosted the market turnover above daily average yesterday to Rs. 1.35 billion, up by 62.7% from Friday. Foreign participation was 54% with foreign Investors recording a net outflow of Rs. 285.8 million compared to a net outflow of Rs. 319.7 million on Friday.
JKH saw foreign outflow of Rs. 171.6 million followed by Hemas (Rs. 77.5 million).
Brokers had mixed sentiments over how the market performed yesterday. Some opined it reflected genuine concern over the impact on coronavirus and foreign selling aggravated the sentiment. Others claimed lower oil prices are beneficial to the Lankan economy hence any panic-selling following the trend of global markets was unnecessary. Analysts said there were concerns over the future strength of the rupee with some anticipating a sharper depreciation. Yesterday in the Forex market, the USD/LKR rate on spot contracts depreciated to a low of Rs. 182.58 yesterday before closing at a level of Rs. 182.55/65 against its previous day’s closing level of Rs. 181.85/00.
Lion Brewery accounted for 40% of the day’s total turnover with high net worth and institutional investor participation. A similar trend was seen on Hemas. NDB Securities said mixed interest was observed in John Keells Holdings and Teejay Lanka whilst retail interest was noted in Access Engineering.
Food, Beverage & Tobacco sector was the top contributor to the market turnover (due to Lion Brewery) whilst the sector index lost 5.18%. The share price of Lion Brewery decreased by Rs. 35.00 (5.83%) to close at Rs. 565.00.
Capital Goods sector was the second highest contributor to the market turnover (due to John Keells Holdings and Hemas Holdings) whilst the sector index decreased by 4.98%. The share price of Hemas Holdings moved down by Rs. 3.00 (4.62%) to close at Rs. 62.00.
Teejay Lanka and Sampath Bank were also included amongst the top turnover contributors. The share price of Teejay Lanka recorded a loss of Rs. 2.90 (8.76%) to close at Rs. 30.20. The share price of Sampath Bank declined by Rs. 6.60 (4.33%) to close at Rs. 145.90.