CSE - ASI - The way forward

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CSE - ASI - The way forward

Postby stocks hunter » Mon Sep 07, 2015 7:26 am

Can you all believe this?

From late nineties until April 30th 2003 ASI was at below 1000 mark.

The ASI journey started its upward direction with lots of obstacles in early part of year 2000 after the electing of new President Mrs. C.Kumaranathunga and ran up to the year 2005. During that period ASI came to very close to 2500 level mark.

We had lots of issues at that time as a country. We were fighting with world’s most brutal terrorist organization – the LTTE. We had to spend billions of rupees for the war and our main economic centers were targeted by the terrorists with an idea of bring down the nation’s economy.
We had the courage to face all these obstacles and to develop our country as well.

As the citizens of this country we had to face lots of economic challenges as high energy prices (fuel/electricity), low salaries, high interest rates, above all fear for life etc..etc…

Listed companies had to face very difficult time period due to the ongoing war, High energy costs, high interest rates, businesses had to limit to ¾ of the country due to the war, lots of extra payments etc…etc…

Mind you still ASI came to high as 2500 levels from low as 500 levels in 1998.

During this run up, ASI temporary came down in 2005 due to the 5th Presidential election which was held in late 2005 in this country. President Mahinda Rajapaksha came to the power as Sri Lanka’s 5th executive president from the election.

Market was expecting Mr.Ranil Wickramasinghe as the president and as result of that there was a temporary drop in ASI after the elections.ASI came down to 1900 levels from 2500 levels.

Then once again ASI started to climb up from early 2006 and went up to 3000 levels in the year 2007.

Still we as citizens of this country and the companies listed in CSE had to face same issues we had in the history and which were mentioned above, during this period as well. The main cause of these factors was the war.

In 2007 then Govt has decided to continue the war until end of it. We were lucky to have brave leaders in the caliber of Former president Mahinda Rajapaksha , Field marshal Sarath Fonseka and all of others who gave genuine support/scarifications to eradicate terrorism from this tiny island. We can’t underestimate the efforts taken by Mr.Ranil Wickramasinghe during his short period as the Prime minister of this country for the action taken to sideline the LTTE politically from the rest of the world as well.

ASI came down to 1500 levels from 3000 levels as a result of the war.

However just see how the investor community was confident about the war. They started to pick shares from late 2008 and continue to collect shares until end of the war. That is the risk we have to take as investors who are dealing with shares. Soon after the announcement of the death of the LTTE leader Prabakaran mkt was erupted like a volcano.

Mkt touched ASI 7800 level in February 2011.

From January 2008 until February 2011 CSE was a heaven to many. They never expected the heaven to come back on their heads until April 2012. Everything was happened within a very short period.

Why the hell heaven came back on our heads.

*In a share market individual share price appreciations had to supported by the fundamentals of that share from time to time. If not, we called it an overvalued share.

*There were around 200+ listed companies in CSE at that time and almost all the shares were trading in the overvalued territory after the year 2010.

*Many were expected mkt to reach ASI 5000 levels immediately after the war to full fill the long awaited vacuum. Because many shares were trading at massive discount prices during war period.

*Then come the manipulators to the scene. They took the ASI 5000 to ASI 7800 levels.

* How come the listed companies show improved profits to justify the fundamentals of the shares to match the increasing share prices within a very short period.

*Govt had to spend a lot of money to develop the country soon after the end of the war.

*Private credit expansion was skyrocketed.

*Bank’s had to increase the interest rates to curtail the credit growth. Interest rates were gone up to 25% levels in listed banks and around 36% in Non banks.

*Investors were allowed massive credits by the brokers. If you deposit Rs100, 000 many were allowed to purchase around Rs500, 000 – Rs800, 000 worth of shares. They had no plans or proper mechanism to control the credit growth in the industry.

*Then come the regulators to control the manipulators/manipulations in the mkt.

*Result was the heaven has come down to our own heads without knowing anything.

*As a result of that Mkt came down to ASI 4800 levels. Many shares were in oversold positions. Investors who blindly purchased over valued shares when the mkt was at ASI 7000 – 7500 levels were reluctant to buy undervalued over sold shares when the ASI was at 4800 levels.

That’s the Sri Lankan style.

At that time interest rates started to come down, speed of the credit growth slowed down, Regulator lifted several rules such as 10% price band in order to attract investors to the mkt.

Some companies started to report exceptional profits. Slowly but surely mkt once again started to climb up and ASI came to ASI 6463 Levels in May 2013 from ASI 4800 levels.

Even the technical corrections happened during this period caused panic among investors and as a result of that a tech correction due after reaching ASI 6463 ended up ASI at 5775 levels in November 2013.

After 2013 investors were little bit confident of the mkt behavior and started to pick up fundamentally sound undervalued shares.

Then come the presidential election fever to the mkt. ASI went up as 7670 in Jan 2015 came down to 6820 levels in March 2015. Mr.Maithreepala Sirisena has become the new president of this country from the elections on 08th of January 2015.

After absorbing the shock in March 2015 Mkt once again got the attention of bargain hunters and the result is ASI touching 7531 levels in Aug 2015.

After that again the uncertainty came to the mkt due the General elections which was held in Sep 17th 2015. From the general elections as promised by the New president and the Prime minister formed a national Govt for the first time in Sri lanka.

The past of the country and the CSE.

During the period under review ASI came to 7215 from ASI 798 levels reported in June 1997.


Sri lanka has successfully faced the uncertainty situation prevailed in the country due to the 30 year old civil war and the following Global financial crisis as well without any major economic setbacks as other countries in the world.

01.1997 Asian financial crisis

02.1998 Russian financial crisis

03.Argentine economic crisis (1999–2002)

04.Early 2000s recession - Dot-com bubble

05.Late-2000s Financial Crisis or the Late-2000s recession,

Including:

*2000s energy crisis

*Subprime mortgage crisis

*United States housing bubble and United States housing market correction

*2008–2012 Icelandic financial crisis

*2008–2010 Irish banking crisis

*Russian financial crisis of 2008–2009

*Automotive industry crisis of 2008–2010

*European sovereign debt crisis

06.Greek government-debt crisis

07.2014 Russian financial crisis

We know how to handle uncertain situation really well.

What is certain to CSE and to Sri lanka is the Uncertainty.


The present situation of the Country and CSE.


*Sri lanka has successfully eradicated the 30 year old civil war prevailed in this country.

* People of this country have selected a new president and a prime minister to run this country with good governance and without corruptions.

*Sri lanka has once again getting the Global recognition what was lacking for the past couple of years. As a result of that USA has already allowed GSP+ facility for our exports to that country. We are expecting other European nations to follow on.

*USA has given the assurance to back Sri lanka in the forth coming HR council meeting.

*We have our president from one party and Prime minister from another party. Further we have Opposition leader who is representing Northern Province and chief opposition whip from another party. A new political culture is developing in the country and the leaders of many countries have expressed their happiness for what is happening in Sri lanka right now.

*Rupee devaluation has supported exporters very much and it is encouraging foreigners as well for direct investments to Sri lanka. Rupee devaluation may lead to reduce the import which is again the need of the hour.

*Bank interest rates are at rock bottom levels. All most all the top companies are enjoying credit facilities at rates well below 9.0% - 10% now, which were around 14% – 16%, couple of years back.

*We have many listed companies in CSE which are trading attractive price levels. Many fundamentally sound future growth stocks are available in the mkt now. You get loads of stocks where PE ratio is well below 10 and the PBV is below 2 or trading below NAV.

*Stock brokers have a good mechanism to control credit in the mkt. No more un controlled credit offered to the clients by the brokers. Credit purchases are limited in the mkt now.

*Cheap energy cost to boost the bottom line of listed companies. (Low fuel cost, low electricity costs)

*Many commodities are rock bottom levels in the world mkt. – (Crude oil, Copper,Alluminium,Iron,Maize,Soya bean etc…etc…)

Identify the value of CSE and the listed shares in CSE. Short term fluctuations are not the end of CSE. These are the strong foundations to the longer term growth of CSE.

If ASI managed to reach 7215 levels with all these issues mentioned here in the past, there are no barriers ASI to reach 8000 – 10000 levels in near future since the country has successfully over come almost every challenges it has faced in the past. Now we have very less challenges when compared with our past. The latest issue is the 2015 Chinese stock market crash. Since we have no large scale direct exports to china the impact from the China mkt down fall is limited to us. Further any global economic down fall will be a positive message to Sri lanka since we are doing large scale imports than exports.

Hence think twice. Do not let go away this golden opportunity.Don't search or look at any uncertainties at this juncture since we are in a very strong footing as a country when compared with the past.

(This is only my personnel view for sharing with everybody – This is not a buy, sell or hold advice of shares since I’m also an investor in CSE)
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Last edited by stocks hunter on Mon Feb 06, 2017 6:56 am, edited 1 time in total.

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Re: CSE - ASI - The way forward

Postby SMR08 » Mon Sep 07, 2015 8:00 am

Tks SH for ur timely post and for ur tireless efforts :)

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Re: CSE - ASI - The way forward

Postby SHARK » Mon Sep 07, 2015 9:01 am

Many thanks SH for your detailed analysis.
Price is what you pay. Value is what you get.”

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Re: CSE - ASI - The way forward

Postby Contra » Mon Sep 07, 2015 2:44 pm

Thank you for your great work.I believe current situation could create another great opportunity.
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Re: CSE - ASI - The way forward

Postby wmdcf » Mon Sep 07, 2015 3:09 pm

Thank you very Sir,.! Very timely post as usual.
I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years. - Warren Buffett

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Re: CSE - ASI - The way forward

Postby Contra » Mon Sep 07, 2015 3:30 pm

Why we should become more bullish now?

•Frontier markets are enjoying one of the lowest oil prices
•Consumer purchasing power has increased
•Low Commodity inflation
•Investors are not interest in gold either
•Interest rates are low
•Still this market has not appreciated like Chinese market during last two years
•There are plenty of value stocks in the market
•Bull market has stages and still this market has more legs. We should see next stages of bull market
•Market didn’t come to the stage of a heated market. In a hot market prices of many stocks will go up and we will hardly find any value stock.
•Short term political uncertainty is also over
•Current pullback has created more value
•Market volatility will not stay for a long period. It has become normal in global markets no
w
•Attractive earnings can be expected from listed companies in the coming quarters (When did we see lower interest and lower cost environment like this during last five years? How about strong demand for some products and services?)
Company, stock market, politics and the economy are four different things.

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Re: CSE - ASI - The way forward

Postby IOSirisena » Mon Sep 07, 2015 4:58 pm

Thanks SH & Contra

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Re: CSE - ASI - The way forward

Postby HobbyInvester » Mon Sep 07, 2015 8:02 pm

Thanks Hunter. Really appreciate your effort, and I could see you are doing really good job for forum members

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Re: CSE - ASI - The way forward

Postby sbw » Mon Sep 07, 2015 8:07 pm

thank you very much SH & contra

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Re: CSE - ASI - The way forward

Postby stocks hunter » Thu Sep 10, 2015 7:46 am

These are the sectors that showed positive growth over the past few quarters. In a mkt upturn better to give more attention for performing shares of these sectors.


Under financial sector, finance companies and companies listed in Food and Beverage sector showed the biggest growth in June quarter 2015 since March quarter 2014.

^:)^
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Re: CSE - ASI - The way forward

Postby Edmond » Thu Sep 10, 2015 1:20 pm

stocks hunter wrote:These are the sectors that showed positive growth over the past few quarters. In a mkt upturn better to give more attention for performing shares of these sectors.


Under financial sector, finance companies and companies listed in Food and Beverage sector showed the biggest growth in June quarter 2015 since March quarter 2014.

^:)^


Thanks SH.

I think F&B (As we seeing), Finance & merchant category got more surge.

Some financial & merchant companies still stagnating attractive, low price.

Cheers..... :-w

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Re: CSE - ASI - The way forward

Postby Contra » Sat Sep 12, 2015 4:16 am

Globally there were some volatility in currencies, bonds and stocks during last couple of weeks. Even there was some volatility in commodities. Global markets should stabilize around October. Current volatility has created another great opportunity.

There is a sliver lining in every dark cloud.

Some assets and commodity prices have fallen more due to weakness in emerging market currencies such as the Brazilian real and Indian rupee. They are some of the top grain and cotton producers in the world. Their cotton, grain and some other raw materials are cheaper than before now. Global stocks have become more attractive due to sell off in stocks during last couple of weeks.

Sri-Lankan market is more attractive than other markets in Asia. There are plenty of value stocks in the market now. As an importer, it is enjoying lower oil, lower cotton, lower grain and other raw material prices. Tourisms sector is also having growth in Sri-Lanka. Next emerging sector in Sri-Lanka is food and hot beverage sector. Currently hot beverage tea is a laggard in this sector. It also should have growth in the coming years due to its outlook globally.

In short, there are plenty of attractive investment opportunities in this frontier market. Market should rebound sooner than later and we should see continuation of remaining stages of current bull market in the coming months.

It is time to identify great winning stocks in the market. Be a wise investor by taking advantage of lower commodity prices, volatility and uncertainly etc to get great returns.
Company, stock market, politics and the economy are four different things.

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Re: CSE - ASI - The way forward

Postby stocks hunter » Mon Sep 14, 2015 10:31 pm

This is the time we should pay more attention to growth stocks and sectors.....

:-bd

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Re: CSE - ASI - The way forward

Postby SHARK » Tue Sep 15, 2015 12:10 am

DIPD
ALUM

Are great picks
Price is what you pay. Value is what you get.”

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Re: CSE - ASI - The way forward

Postby NiGHTHAWK » Tue Sep 15, 2015 3:04 pm

Superb post, thank you very much SH for your insights! Appreciate the comments from other seniors as well :ymapplause:

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Re: CSE - ASI - The way forward

Postby stocks hunter » Fri Sep 18, 2015 6:42 am

stocks hunter wrote

The present situation of the Country and CSE.

*Sri lanka has successfully eradicated the 30 year old civil war prevailed in this country.

* People of this country have selected a new president and a prime minister to run this country with good governance and without corruptions.

*Sri lanka has once again getting the Global recognition what was lacking for the past couple of years. As a result of that USA has already allowed GSP+ facility for our exports to that country. We are expecting other European nations to follow on.

*USA has given the assurance to back Sri lanka in the forth coming HR council meeting.

*We have our president from one party and Prime minister from another party. Further we have Opposition leader who is representing Northern Province and chief opposition whip from another party. A new political culture is developing in the country and the leaders of many countries have expressed their happiness for what is happening in Sri lanka right now.

*Rupee devaluation has supported exporters very much and it is encouraging foreigners as well for direct investments to Sri lanka. Rupee devaluation may lead to reduce the import which is again the need of the hour.

*Bank interest rates are at rock bottom levels. All most all the top companies are enjoying credit facilities at rates well below 9.0% - 10% now, which were around 14% – 16%, couple of years back.

*We have many listed companies in CSE which are trading attractive price levels. Many fundamentally sound future growth stocks are available in the mkt now. You get loads of stocks where PE ratio is well below 10 and the PBV is below 2 or trading below NAV.

*Stock brokers have a good mechanism to control credit in the mkt. No more un controlled credit offered to the clients by the brokers. Credit purchases are limited in the mkt now.

*Cheap energy cost to boost the bottom line of listed companies. (Low fuel cost, low electricity costs)

*Many commodities are rock bottom levels in the world mkt. – (Crude oil, Copper,Alluminium,Iron,Maize,Soya bean etc…etc…)

Identify the value of CSE and the listed shares in CSE. Short term fluctuations are not the end of CSE. These are the strong foundations to the longer term growth of CSE.

If ASI managed to reach 7215 levels with all these issues mentioned here in the past, there are no barriers ASI to reach 8000 – 10000 levels in near future since the country has successfully over come almost every challenges it has faced in the past. Now we have very less challenges when compared with our past. The latest issue is the 2015 Chinese stock market crash. Since we have no large scale direct exports to china the impact from the China mkt down fall is limited to us. Further any global economic down fall will be a positive message to Sri lanka since we are doing large scale imports than exports.

Hence think twice. Do not let go away this golden opportunity.Don't search or look at any uncertainties at this juncture since we are in a very strong footing as a country when compared with the past.


Now we have more positive news to CSE than negative news. But more positives seems to be boomerang on CSE.

* We have received a better report from UN with regard to the HR violations which is really positive news for the mkt.

http://www.ft.lk/article/472305/Mangala-upbeat-on-SL-status-at-UNHRC

*There is no change for US interest rates as announced by the FED yesterday.Many expects low foreign participation and the foreign selling took place in last couple of months due to expected rate hike from FED. Now it has not happened and a great news for CSE.

*Devaluation of rupee has a positive effect for foreign investments to SL.

*Devaluation of rupee is a great news for many listed export oriented companies and the banks which have large USD deposits.Failing raw material prices have offset any negative effect to companies that do imports.

Now what else you are expecting CSE to go up.

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Re: CSE - ASI - The way forward

Postby SHARK » Fri Sep 18, 2015 1:02 pm

Market has become numbed on the positives :D
Price is what you pay. Value is what you get.”

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Re: CSE - ASI - The way forward

Postby Contra » Fri Sep 18, 2015 1:22 pm

It is no need to be panic. There will be more economic activities due to following.

Growth in the tourism industry
Growth in the Agriculture industry
Creation of economic zones
Colombo port city
Mega polis development
Export driven economy
Simplification of Tax system

I want to see more development for farmers’ community and plantation community as well. They are backbone of the economy.
Company, stock market, politics and the economy are four different things.

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Re: CSE - ASI - The way forward

Postby stocks hunter » Thu Oct 01, 2015 7:14 pm

This is a good message for us to mention that HNWI are active once again.

:-!
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Re: CSE - ASI - The way forward

Postby Contra » Fri Oct 02, 2015 12:46 pm

We should see further growth in Food and beverages, hotels and travels, manufacturing, banking and finance and diversified sectors in the coming quarters. Once we see quarterly and yearly results we can find out some top performers in the market.
Company, stock market, politics and the economy are four different things.

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Re: CSE - ASI - The way forward

Postby Contra » Sun Oct 11, 2015 6:31 am

I just glanced through couple of small, mid and large stocks which traded on Friday. They all have something similar pattern. In addition, they all had higher volume and higher prices than average normal days. It looks like they are going to break their upper limit further. Even there were some supports for leading banks in Sri-Lanka.It is something that is going to impact broader market. It is better to see bullish outlook in variety of stocks. Then we can get more confidence on the market. As I said before we are going to see opportunity in the market from October onwards. We should stay with right type of stocks to gain above average capital gain.

:ymsick: =:) :ymsick: =:) :ymsick: =:) :ymsick: =:) :ymsick: =:) :ymsick: =:) :ymsick: =:) :ymsick: =:) :ymsick: =:) :ymsick: =:) :ymsick: =:) :
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Re: CSE - ASI - The way forward

Postby IOSirisena » Sun Oct 11, 2015 11:10 pm

Thanks Contra for your findings which are indications of imminent bull market

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Re: CSE - ASI - The way forward

Postby stocks hunter » Mon Oct 12, 2015 7:00 pm

Couple of foreign buyers are now in the town.Today they purchased massive amount of DIAL shares. They are looking to buy HNB as well. Net foreign inflow witnessed today and Friday as well. Today we saw a significant volume from foreigners.

:ymhug: :ymhug: :ymhug:
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Re: CSE - ASI - The way forward

Postby stocks hunter » Mon Oct 12, 2015 10:12 pm

LALU continuously purchased by foreigners now for a long time. Where will be the end of this?

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Re: CSE - ASI - The way forward

Postby stocks hunter » Tue Oct 13, 2015 7:02 pm

ASI down how ever the most sought stocks in CSE due strong future earnings + fundamental backing + technical backing are continuously going up with with small intervals.

Eg: * BFL * GRAN *TAFL *LGL have started to move up after couple of days intervals. ACL and CIND are taking a small break. ACL once again a very good volume traded. This is heading for a super future with the expected super results in Sep Q 15.

ASI was drag down by COMB,DIAL,JKH,CTC,AEL,SAMP,NDB and HNB -X shares. This is due to foreign selling and nothing to do with locals since many locals are focusing on shares mentioned earlier.

;) ;) ;)
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