Week ending 28-Sep 21-Sep +/- ASPI 5, , % S&P SL20 3, , % Banking & Finance 15, ,

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1 (Turnover LKR Bn) ASPI Equities Hit a 5-Year low. Inflation Eases in Aug 18 Despite Rising Core s.. ASPI 0.72% S&P SL % The Bourse ended the week Cont. P2 Foreign investors closed the week... Cont. P3 Negative investor sentiment continued. Cont. P4 Economic Snapshot P5 Indices vs. Turnover (25 th Sep 28 th Sep) 5,950 5,920 5,890 5,860 5,830 5, ASPI S&P SL20 25-Sep 26-Sep 27-Sep 28-Sep 25-Sep 26-Sep 27-Sep 28-Sep 3,300 3,200 3,100 3,000 2,900 2,800 S&P SL20 KEY STATISTICS Week ending 28-Sep 21-Sep +/- ASPI 5, , % S&P SL20 3, , % Banking & Finance 15, , % Food & Beverage 24, , % Diversified 1, , % Hotel & Travel 2, , % Plantations % Manufacturing 2, , % Turnover (LKR Bn) % Foreign Buying (LKR Mn) , % Foreign Selling (LKR Mn) 1, , % Daily Average Turnover (LKR Bn) % Daily Average Foreign Buying (LKR Mn) % Daily Average Foreign Selling (LKR Mn) % TOP 10 GAINERS TOP 10 LOSERS Code Opening Closing WoW % Change ADAM INVESTMENTS AINVN % S M B LEASING[NV] SEMBX % TESS AGRO TESSN % SERENDIB HOTELS[NV] SHOTX % TESS AGRO[NV] TESSX % KELANI CABLES KCABN % RADIANT GEMS RGEM % DIALOG FINANCE CALFN % MALWATTE[NV] MAL X % SOFTLOGIC SHL N % Code Opening Closing WoW % Change NATION LANKA CSF N % ADAM CAPITAL PCHHN % S M B LEASING SEMBN % HUEJAY HUEJN % PEOPLE'S MERCH PMB N % BRAC LNKA FNANCE NIFLN % AGSTAR PLC AGSTN % MTD WALKERS KAPIN % MULLERS MULLN % BERUWALA RESORTS BERUN % 1

2 Market Review Indices The Bourse ended the week on a negative note as the ASPI decreased by points (or -0.72%) to close at 5, points, while the S&P SL20 Index also decreased by points (or -0.49%) to close at 3, points. Turnover & Market Capitalization JKH was the highest contributor to the week s turnover value, contributing LKR 0.58Bn or 34.83% of total turnover value. Sampath Bank followed suit, accounting for 13.43% of turnover (value of LKR 0.22Bn) while Ceylon Guardian contributed LKR 0.11Bn to account for 6.32% of the week s turnover. Total turnover value amounted to LKR 1.67Bn (cf. last week s value of LKR 3.50Bn), while daily average turnover value amounted to LKR 0.42Bn (-40.46% W-o-W) compared to last week s average of LKR 0.70Bn. Market capitalization meanwhile, decreased by 20.14% W-o-W (or LKR 20.14Bn) to LKR2,752.86Bn cf. LKR2,773.00Bn last week. Liquidity (in Value Terms) The Diversified sector was the highest contributor to the week s total turnover value, accounting for 40.81% (or LKR 0.68Bn) of market turnover. Sector turnover was driven primarily by JKH, Melstacorp & Softlogic Holdings which accounted for 95.69% of the sector s total turnover. The Banks, Finance & Insurance sector meanwhile accounted for 28.42% (or LKR 0.47Bn) of the total turnover value, with turnover driven primarily by Sampath Bank & Commercial Bank which accounted for 65.66% of the sector turnover. The Investment Trust sector was also amongst the top sectorial contributors, contributing 10.97% (or LKR 0.18Bn) to the market driven by Ceylon Guardian which accounted for 57.63% of the sector turnover. Liquidity (in Volume Terms) The Diversified sector dominated the market in terms of share volume, accounting for 20.56% (or 10.63Mn shares) of total volume, with a value contribution of LKR 0.68Bn. The Banks, Finance & Insurance sector followed suit, adding 16.57% to total turnover volume as 8.57Mn shares were exchanged. The sector s volume accounted for LKR 0.47Bn of total market turnover value. The Telecom sector meanwhile, contributed 4.76Mn shares (or 9.20%), amounting to LKR 0.06Bn. Top Gainers & Losers Adam Investments was the week s highest price gainer; increasing 100.0% W-o-W from LKR0.10 to LKR0.20 while SMB Leasing[NV](+50.0% W-o-W), Tess Agro(+25.0% W-o-W) and Serendib Hotels[NV] (+25.0% W-o-W) were also amongst the top gainers. Nations Lanka was the week s highest price loser; declining 22.2% W-o-W to close at LKR0.70 while Adam Capital(-20.0% W-o-W), SMB Leasing (-20.0% W-o-W) and Huejay Lanka International(-16.7% W-o-W) were also amongst the top losers over the week. TOP 10 TURNOVERS Code Opening Closing Value (Rs. Mn) JKH JKH N SAMPATH SAMPN CEYLON GUARDIAN GUARN COMMERCIAL BANK COMBN CEYLON INV. CINVN CHEVRON LLUBN DIALOG DIALN MELSTACORP MELSN SOFTLOGIC SHL N LMF LMF N

3 LKR. Mn LKR. Mn Market Review (Cont d) NATIONS TRUST SWISSTEK Net Foreign Purchases (21 Sep-28 Sep) Volume Change ('000s) CARSONS EXPOLANKA CHEVRON RICHARD PIERIS RAIGAM SALTERNS MELSTACORP DIALOG SOFTLOGIC* Net Foreign Sales (21 Sep-28 Sep) Volume Change ('000s) TESS AGRO SOFTLOGIC LIFE SIERRA CABL COMMERCIAL BANK[X] COMMERCIAL BANK AMBEON HOLDINGS SAMPATH DISTILLERIES JKH CEYLON INV. (1,600) (1,280) (960) (640) (320) - *Volume change of Softlogic Holdings(1.09Mn shares)from 21 st Sep 28 th Sep not displayed. Foreign investors closed the week in a net selling position with total net outflow amounting to LKR 0.28Bn relative to last week s total net outflow of LKR 0.74Bn (+62.4% W-o-W). Total foreign purchases decreased by 47.9% W-o-W to LKR 0.75Bn from last week s value of LKR 1.45Bn, while total foreign sales amounted to LKR 1.03Bn relative to LKR 2.2Bn recorded last week (-52.9% W-o-W). In terms of volume, Softlogic Holdings & Dialog Axiata led foreign purchases while Ceylon Investment & JKH led foreign sales. In terms of value, Softlogic Holdings & Melstacorp led foreign purchases while JKH & Sampath Bank led foreign sales. Net Foreign Purchases (By Transaction Value) Foreign Holding (%) Value* Net Change 28/09/18 21/09/18 (LKR. Mn) SOFTLOGIC 31.86% 31.77% 1,085, MELSTACORP 26.20% 26.17% 347, CARSONS 22.91% 22.89% 39, DIALOG 94.33% 94.33% 515, CHEVRON 22.12% 22.08% 90, HNB[X.0000] 47.14% 47.12% 21, NATIONS TRUST 24.51% 24.49% 36, CEYLON GUARDIAN 8.13% 8.08% 36, SWISSTEK 2.25% 2.11% 38, RICHARD PIERIS 73.92% 73.92% 130, Net Foreign Sales (By Transaction Value) Foreign Holding (%) Value* Net Change 28/09/18 21/09/18 (LKR. Mn) JKH 55.57% 55.66% (1,113,548) (146.43) SAMPATH 22.26% 22.39% (374,430) (89.83) CEYLON INV. 2.99% 4.56% (1,563,427) (54.72) COMMERCIAL BANK 33.71% 33.73% (189,120) (21.37) DISTILLERIES 1.73% 1.75% (760,072) (12.69) COMMERCIAL BANK[X.0000] 24.10% 24.31% (139,753) (12.45) NESTLE 95.46% 95.47% (4,171) (6.88) SOFTLOGIC LIFE 45.50% 45.53% (95,000) (2.48) LANKA HOSPITALS 29.05% 29.08% (59,713) (2.39) AMBEON HOLDINGS 1.06% 1.12% (196,582) (2.18) Note: *Value based on closing price and not on actual traded price Foreign Purchases Vs. Sales Foreign Purchases Foreign Sales Week Ending Net Position of Foreign Holdings Sep 26-Sep 27-Sep 28-Sep Sep 14-Sep 21-Sep 28-Sep 3

4 Announcements for the Week Dividend Announcements DPS (Rs.) Type XD Date MILLENIUM HOUSING DEVELOPERS 0.35 Final ASIA SIYAKA COMMODITIES 0.10 Final Point of View Negative investor sentiment continued to dominate Sri Lankan equity markets, and the ASPI ended the week on a negative note for the 3 rd consecutive week. On Tuesday, the ASPI hit a 5-year low of 5, (71 index point drop for the day) amid higher foreign selling on the back of worries regarding further rupee depreciation. The LKR depreciated 3.8% against the USD in the last two weeks, bringing the YTD depreciation on the LKR to ~10.2%. Similar to most other EM/FM countries (which are facing higher currency depreciation in 2018 amid higher US rates), LKR pressure has partially stemmed from rising US rates and the USD. So far this year, the US Fed has raised interest rate 3 times and indicated that a fourth hike in December is possible while 3 hikes are likely in 2019 and one more in Although the Colombo bourse recovered on Wednesday (from Tuesday s LKR depreciation-led decline) by regaining 55 points, it failed to retain this positive momentum and the Index lost a further 25 points over Thursday and Friday to end the week ~38 points below the 5,900 mark (ie: ). Meanwhile, despite Tuesday s higher foreign selling, the foreign equity sell-off on the bourse eased somewhat over the remainder of the week, with foreign investors recording a net outflow of just Rs.279Mn cf. Rs.743Mn last week. Subsequently, the YTD foreign outflow on the Colombo bourse increased to Rs.6.1Bn (cf. Rs.5.9Bn). The negative sentiment surrounding the LKR depreciation was also reflected in the week s activity levels, and weekly turnover during the week declined 52% W-o-W to just Rs.1.7Bn cf. Rs.3.5Bn last week. Markets in the week ahead are likely to look for cues from next week s Central Bank s decision on policy rates. Inflation Eases in Aug 18 Despite Rising Core s Headline inflation at the national level eased in August, in contrast to urban inflation levels which rose over the period to 5.9% Y-o-Y cf. 5.4% in Jul 18 due to food inflation (7.5% Y-o-Y in Aug 18 cf. 5.6% in Jul 18). The decline in inflation at the national level was largely driven by the reduction in food inflation (0.0% in Aug 18 from 2.4% in Jul 18) while non-food inflation rose to just 4.7% Y-o-Y in Aug 18 relative to 4.3% Y-o-Y in Jul 18. The increase in non-food inflation was driven by higher i) transport costs, ii) health care, iii) housing, water, electricity, gas & other fuels, and iv) an increase in prices of alcoholic beverages & tobacco. Upward price revisions to petrol and diesel in line with rising global crude oil prices led to an increase in transport costs while bus and taxi fares including three-wheelers were also revised upwards. Moderating inflation levels (due to the easing of food prices compared to last year s higher base prices) meanwhile led ADB to lower its inflation outlook for Sri Lanka to 4.5% (from 5.2%) in 2018 and 4.7% (from 5.0%) in The ADB also noted that tightening Government consumption, stagnant fixed investments and lower net exports also warranted a downward revision in the country s growth forecast to 3.8% in 2018 and 4.5% in Meanwhile, greater import dollar demand led the LKR to hit an all-time low of yesterday despite CBSL intervention. The LKR has weakened ~5% against the USD during September and depreciated ~10% so far this year and the CBSL has reiterated that it will intervene during periods of excessive volatility. Sources: CBSL, economynext and Daily Mirror 4

5 Exports /Imports (USD Mn) Total Arrivals T- Bill (6M ) Rate (%) Rs. Per kilo(unweighted) Rs /USD CCPI Economic Snapshot Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18 Jul 18 Aug 18 Interest Rates Prime Lending Rate Ave. Wtd. Deposit Rates Ave. Wtd. Fixed Dep. Rates CCPI Inflation Y-o-Y % (Base 2013) Q1 18 GDP Growth (Base 2010) 9.1% 3.4% 4.9% 4.8% 4.4% 3.1% 3.2% Source Central Bank Exchange Rate, Rs. vs. US$ Inflation (CCPI-N) YoY% Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 6 Month T-Bill Yield Tea s Sep-15 Jun-16 Mar-17 Dec-17 Sep Sep-15 Jun-16 Mar-17 Dec-17 Sep-18 Source: Sri Lanka Tea Board Export & Trade Balance Trends in Tourist Arrivals Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Exports (LHS) Imports (LHS) Trade Balance (RHS) Trade Balance (USD Mn) 250, , , ,000 50,000 80% 64% 48% 32% 16% 0% 0-16% Aug-15 May-16 Feb-17 Nov-17 Aug-18 Source: Sri Lanka Tourism Development Authority Y-o-Y Growth 5

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