Week ending 07-Sep 31-Aug +/- ASPI 6, , % S&P SL20 3, , %

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1 (Turnover LKR Bn) ASPI ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Positive Momentum Continues Despite Lower Acitivty Levels Domestic & Global Pressures Push LKR Down 5% ASPI ^.62% S&P SL2.38% The Bourse ended the week Cont. P2 Foreign investors closed the week... Cont. P3 Sri Lankan equities continued. Cont. P4 Economic Snapshot P5 Indices vs. Turnover (3 rd Sep 7 th Sep) 6,15 6,13 6,11 6,9 6,7 6, ASPI S&P SL2 3-Sep 4-Sep 5-Sep 6-Sep 7-Sep 3-Sep 4-Sep 5-Sep 6-Sep 7-Sep 3,4 3,32 3,24 3,16 3,8 3, S&P SL2 KEY STATISTICS Week ending 7-Sep 31-Aug +/- ASPI 6, , % S&P SL2 3, , % Banking & Finance 16, , % Food & Beverage 25, , % Diversified 1, , % Hotel & Travel 2, , % Plantations % Manufacturing 2, , % Turnover (LKR Bn) % Foreign Buying (LKR Mn) % Foreign Selling (LKR Mn) , % Daily Average Turnover (LKR Bn) % Daily Average Foreign Buying (LKR Mn) % Daily Average Foreign Selling (LKR Mn) % TOP 1 GAINERS TOP 1 LOSERS Code Opening Closing WoW % Change A I A INSURANCE* CTCEN % KELSEY KDL N % PEOPLE'S MERCH PMB N % TESS AGRO TESSN % MTD WALKERS KAPIN % LOLC FINANCE LOFCN % MAHAWELI REACH MRH N % AHOT PROPERTIES AHPLN % COMM LEASE & FIN CLC N % ACME ACMEN % *Proposed voluntary de-listing of shares not adopted. Code Opening Closing WoW % Change ADAM INVESTMENTS AINVN % S M B LEASING[NV] SEMBX % SERENDIB HOTELS[NV] SHOTX % ADAM CAPITAL PCHHN % HORANA HOPLN % SINGHE HOSPITALS SINH % EQUITY TWO PLC ETWON % RESUS ENERGY HPWRN % BIMPUTH FINANCE BLI N % COLOMBO CITY PHARN % 1

2 ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Market Review Indices The Bourse ended the week on a mixed note as the ASPI increased by points (or +.62%) to close at 6, points, while the S&P SL2 Index decreased by points (or -.38%) to close at 3, points. Turnover & Market Capitalization JKH was the highest contributor to the week s turnover value, contributing LKR.26Bn or 19.29% of total turnover value. Lion Brewery followed suit, accounting for 17.56% of turnover (value of LKR.24Bn) while HNB contributed LKR.13Bn to account for 9.79% of the week s turnover. Total turnover value amounted to LKR 1.35Bn (cf. last week s value of LKR 2.73Bn), while daily average turnover value amounted to LKR.27Bn (-5.65% W-o-W) compared to last week s average of LKR.55Bn. Market capitalization meanwhile, increased by.62% W-o-W (or LKR 17.63Bn) to LKR 2,866.15Bn cf. LKR 2,848.52Bn last week. Liquidity (in Value Terms) The Banks, Finance & Insurance sector was the highest contributor to the week s total turnover value, accounting for 31.37% (or LKR.42Bn) of market turnover. Sector turnover was driven primarily by HNB, Union Assurance, Commercial Bank, Sampath Bank & Central Finance which accounted for 73.39% of the sector s total turnover. The Beverage,Food & Tobacco sector meanwhile accounted for 23.49% (or LKR.32Bn) of the total turnover value, with turnover driven primarily by Lion Brewery which accounted for 74.75% of the sector turnover. The Diversified sector was also amongst the top sectorial contributors, contributing 21.36% (or LKR.29Bn) to the market driven by JKH which accounted for 9.34% of the sector turnover. Liquidity (in Volume Terms) The Banks, Finance & Insurance sector dominated the market in terms of share volume, accounting for 31.11% (or 17.33Bn shares) of total volume, with a value contribution of LKR.42Bn. The Plantations sector followed suit, adding 12.5% to total turnover volume as 6.96Mn shares were exchanged. The sector s volume accounted for LKR.5Bn of total market turnover value. The Diversified sector meanwhile, contributed 6.95Mn shares (or 12.47%), amounting to LKR.29Bn. Top Gainers & Losers AIA Insurance was the week s highest price gainer; increasing 8.5% W-o-W from LKR948.2 to LKR525.2 while Kelsey Development (+38.% W-o-W), People s Merchant(+21.2% W-o-W) and Tess Agro (+2.% W-o-W) were also amongst the top gainers. Adam Investment was the week s highest price loser; declining 5.% W-o-W to close at LKR.1 while SMB Leasing [NV] (-33.3% W-o-W), Serendib Hotels[NV] (-21.1% W-o-W) and Adam Capital(-2.% W-o-W) were also amongst the top losers over the week. TOP 1 TURNOVERS Code Opening Closing Value (Rs. Mn) JKH JKH N LION BREWERY LIONN HNB HNB N UNION ASSURANCE UAL N COMMERCIAL BANK COMBN HATTON HPL N SAMPATH SAMPN DIALOG DIALN CENTRAL FINANCE CFINN MTD WALKERS KAPIN

3 LKR. Mn LKR. Mn ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Market Review (Cont d) Net Foreign Purchases (31 Aug-7 Sep) Net Foreign Sales (31 Aug-7 Sep) SOFTLOGIC CAP EXPOLANKA Volume Change ('s) Volume Change ('s) EAST WEST COMMERCIAL BANK TEEJAY LANKA MILLENNIUM HOUSE CENTRAL FINANCE HNB RICHARD PIERIS TOKYO CEMENT (565) (452) (339) (226) (113) - *Volume change of Dialog (2.5Mn Shares) and Distilleries (1.6Mn Shares) from 31 st Aug 7 th Sep not displayed. NATION LANKA LAUGFS GAS ACCESS ENG SL MALWATTE[X] CHEVRON LOLC FINANCE MERCHANT BANK JKH DISTILLERIES* DIALOG* Foreign investors closed the week in a net selling position with total net outflow amounting to LKR.6Bn relative to last week s total net outflow of LKR.77Bn (+91.7% W-o-W). Total foreign purchases increased by 7.47% W-o-W to LKR.65Bn from last week s value of LKR.6Bn, while total foreign sales amounted to LKR.71Bn relative to LKR 1.37Bn recorded last week (-48.19% W-o-W). In terms of volume, Tokyo Cement & Richard Pieris led foreign purchases while Dialog & Distilleries led foreign sales. In terms of value, HNB & Lion Brewery led foreign purchases while JKH & Dialog led foreign sales. Net Foreign Purchases (By Transaction Value) Foreign Holding (%) Value* Net Change 7/9/18 31/8/18 (LKR. Mn) HNB 35.99% 35.93% 258, LION BREWERY 37.34% 37.29% 37, CENTRAL FINANCE 13.57% 13.49% 181, COMMERCIAL BANK 33.85% 33.83% 115, TOKYO CEMENT 24.94% 24.82% 317, UNION ASSURANCE.14%.11% 2, TEEJAY LANKA 45.8% 45.78% 14, RICHARD PIERIS 73.91% 73.89% 316, LOLC 5.11% 5.11% 27, MILLENNIUM HOUSE 29.48% 29.36% 161, Net Foreign Sales (By Transaction Value) Foreign Holding (%) Value* Net Change 7/9/18 31/8/18 (LKR. Mn) JKH 56.39% 56.43% (56,56) (77.46) DIALOG 94.34% 94.38% (2,498,729) (3.98) CHEVRON 21.2% 21.14% (282,983) (2.8) DISTILLERIES 1.81% 1.83% (1,59,858) (2.24) CEYLON TOBACCO 97.47% 97.48% (13,721) (18.53) COLD STORES 1.7% 1.71% (15,55) (12.8) MERCHANT BANK.77% 1.9% (543,522) (5.22) LAUGFS GAS.17%.24% (227,315) (4.9) ACCESS ENG SL 9.8% 9.11% (237,55) (3.56) AITKEN SPENCE 24.4% 24.5% (44,745) (2.4) Note: *Value based on closing price and not on actual traded price Foreign Purchases Vs. Sales Foreign Purchases Foreign Sales 2 Week Ending Net Position of Foreign Holdings Sep 4-Sep 5-Sep 6-Sep 7-Sep Aug 24-Aug 31-Aug 7-Sep 3

4 ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Announcements for the Week Dividend Announcements DPS (Rs.) Type XD Date PEOPLE S INSURANCE.75 Interim TRADE FINANCE & INVESTMENTS 1. Final HUNTERS & COMPANY 2.25 Final THE AUTODROME.5 First & Final Point of View Sri Lankan equities continued the positive momentum created last week as the benchmark index gained ~38 points or.62% during the week. The news of the potential return of the EPF to equities boosted sentiments last week and early this week. However, protests against the government by joint opposition created some political tension and the market also reacted with a ~8 point loss on both Wednesday and Thursday. Despite this, the Broad Market Index regained ~18 points, recovering from its 17-month low of points last Tuesday. Consequently, YTD loss on ASPI reduced to 4.6% cf. 5.2% loss till last week. Despite the recovery in the Index, Activity levels remained dull throughout the week and the maximum daily turnover of Rs..4Bn (recorded on Monday) for the week was also lower than the YTD daily average turnover of Rs..8Bn. Following the protest, on Thursday daily turnover hit a 5-month low of Rs..1Bn since April this year. Local HNI and Institutional investors remained inactive during the week as crossing for the week accounted for only 3% of weekly turnover (cf. 42% last week and YTD average of 4%). Lion Brewery dominated the bulk parcel purchases with 53% of the total crossing while HNB accounted for 22%. The foreign equity sell-off on the Colombo bourse meanwhile eased as foreign investors recorded a net foreign outflow of ~Rs.64Mn during the week cf. Rs.771Mn outflow last week. Markets in the week ahead are likely look for cues from economic and political development. Domestic & Global Pressures Push LKR Down 5% In its latest Sovereign Credit overview for the APAC region, Fitch Ratings noted that although Sri Lanka s policy framework has improved and supports both macroeconomic stability and rising government revenues, high government debt and a challenging external debt servicing outlook remain risks to the sovereign. Fitch noted that although Sri Lanka s projected debt service payments are significant at $15Bn in , its foreignexchange reserves as at Jun 18 was just $9.3Bn highlighting the country s vulnerability to external financing pressures particularly in the context of rising US rates. Fitch estimates that GDP in 218 will grow to just 3.8% before improving to 4.5% percent in 219 while Government debt as a % of GDP should fall to 75.9% in 219 (cf. 77.6% currently). The Agency noted however, that progress has been made on critical fiscal reforms (including the approval of an automatic fuel price mechanism effective May 218) while steps have also been taken to introduce an automatic electricity pricing mechanism and establish a committee to develop a detailed restructuring plan for Sri Lankan Airlines. However, it noted that deteriorating policy coherence and credibility could compromise investor confidence or derail the IMF s EFF program and thus lead to external funding stress. The Group added however, that 1) further improvement in external finances (through higher nondebt-creating inflows or a reduction in external sovereign refinancing risks from improved liability management) and ii) continued improvement in public finances on the back of a credible medium-term fiscal strategy remain positive sensitivities for the Sovereign. 4

5 Exports /Imports (USD Mn) Total Arrivals T- Bill (6M ) Rate (%) Rs. Per kilo(unweighted) Rs /USD CCPI ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Economic Snapshot Dec 17 Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18 Jul 18 Interest Rates Prime Lending Rate Ave. Wtd. Deposit Rates Ave. Wtd. Fixed Dep. Rates CCPI Inflation Y-o-Y % (Base 213) Q1 18 GDP Growth (Base 21) 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% Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 6 Month T-Bill Yield Tea s Jul-15 Apr-16 Jan-17 Oct-17 Jul-18 3 Jul-15 Apr-16 Jan-17 Oct-17 Jul-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) 25, 2, 15, 1, 5, 8% 64% 48% 32% 16% % -16% May-15 Feb-16 Nov-16 Aug-17 May-18 Source: Sri Lanka Tourism Development Authority Y-o-Y Growth 5

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