February 8, 2019 (LBO) – The Colombo Stock Exchange (CSE) continued this week to suffer from foreign selling of stocks.
For the week ended today, net foreign selling was approximately Rs900mn, this is up from Rs400mn net foreign selling in the previous week.
The foreign selling figures do not include significant foreign selling that would have happened when Sri Lanka’s leading blue chip company John Keells Holdings (JKH) executed a buyback offer to repurchase approximately Rs10bn (US$56mn) worth of stock last week. It is expected than most of the stock which was repurchased was sold by foreign institutions.
Despite the heavy foreign selling in JKH stock, the price has held relatively steady as Sri Lanka’s largest high net worth investors, Harry Jayawardena and the Captains, have been aggressively increasing their positions in the company. Together they now likely own well over 30% of the shares of the company. They have been accumulating shares at prices close to book value.
Foreigners sold a net Rs23bn (US$130mn) worth of Sri Lankan equities in 2018, and to date in 2019 have likely net sold well over Rs10bn (US$55mn) net for the year if figures from the JKH buyback execution are included.
Sri Lanka stocks look cheap with a market PE of less than 10, and price to book ratios approaching book value.