Removal of JKH from MSCI Index drives Tundra Fund to up stake to 2.5%

The Sweden-based global asset management company, Tundra Fonder’s Tundra Sustainable Frontier Fund said they upped their position in Sri Lanka’s premier blue chip John Keells Holdings PLC (JKH) following the latter’s exclusion from the Frontier100 Index.

“As Sri Lanka’s largest company, John Keells, fell sharply in conjunction with their exclusion from the Frontier100 Index (an index that is primarily tracked by ETFs), we took the opportunity to increase our position in the company to approximately 2.5 percent (previously 1 percent) at attractive levels,” Tundra Sustainable Frontier Fund in their latest update said. 

MSCI Frontier Markets 100 Index, which captures large- and mid-cap representation across 29 frontier markets, removed Keells from its index, triggering the foreign selling.

However, foreign investors, who mostly sold shares of John Keells last week, were seen buying JKH shares back after low share prices “made it more attractive”, Reuters said quoting unnamed stockbrokers. 

Meanwhile, speculation was rife this week that Sampath Bank PLC, Sri Lanka’s third largest private lender by assets has replaced JKH on the MSCI Frontier Markets 100 Index.

Sampath share yesterday closed Rs.7.40 up or 2.38 percent at Rs.318.40.

Shares end higher, foreign buying boosts sentiment

(Colombo) REUTERS: Sri Lankan shares ended firmer yesterday, recovering from their lowest close in over five months hit in the previous session, led by diversified and financial stocks while foreign investor purchases boosted sentiment.

Foreign investors bought net Rs.182.9 million (US$1.16 million) worth of equities yesterday, but the market has witnessed a year-to-date net foreign outflow to Rs.641.1 million worth of shares.

The Colombo stock index closed 0.23 percent higher at 6,409.51.

“Market is positive mainly due to the foreign and local buying in John Keells and Sampath Bank,” said Hisham Haniffa, assistant manager, Softlogic Stockbrokers (Pvt) Ltd.

“Investors are picking up Keells after the recent sell-off.”

Most of the investors have adopted the wait-and-watch approach, hoping for some positive news especially on the economic front, analysts said.

Turnover was Rs.680.6 million, well below this year’s daily average of Rs.991.1 million.

A weaker rupee, political uncertainty and the recent fuel price hike weighed on sentiment in the past week, as local investors mostly remained on the sidelines as they gauged the impact of the floods that killed 24 people in the island nation over the past two weeks, brokers said.

The rupee hit a fresh low of 158.80 per dollar on Friday owing to dollar demand from foreign banks and importers, but ended steady on late inflows from remittances.
Shares in conglomerate John Keells Holdings Plc ended 1.9 percent higher, while Ceylon Tobacco Co Plc ended 1.0 percent up, Nestle Lanka Plc closed 2.7 percent firmer and Sampath Bank Plc ended up 2.4 percent.

Sri Lanka Telecom Plc closed 3.5 percent higher and Dialog Axiata Plc ended 1.4 percent firmer.

Foreign investors, who mostly sold shares of John Keells last week, bought the market heavyweight after low share prices “made it more attractive”, stockbrokers said.
MSCI Frontier Markets 100 Index, which captures large- and mid-cap representation across 29 frontier markets, removed Keells from its index, triggering the foreign selling.