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Summary: Sri Lanka has been one of the best performing global markets with more than 30% return for the S&P SL20 Index in just under a month. EMAlpha Research team did an extensive news flow analysis on the major stock constituents and found that this was triggered by two major events: a) First was the S&P SL 20 revision. Four out of the top five performers of the index are recent entrants, b) Second was the Covid-19 pandemic, courtesy of which some of these companies found themselves ‘at the right time and at the right place’. Also, events like Restructuring (in case of LOLC Holdings) and Stock Splits (Dipped and Hayleys) drove the returns higher. However, Restructuring and Stock Splitting are not regular occurrences. Hence, we think that this positive momentum is unlikely to sustain and the returns in the near term will be more subdued. Now, how can EMAlpha’s analysis of unstructured data help Investors on Sri Lanka? a) The news analysis can be tracked for the companies experiencing tailwinds in order to make an assessment on the chances of their inclusion in S&P SL20 during the next revision, b) The unstructured data analysis in other geographies can also be used to assess the potential impact on some of the larger companies in Sri Lanka.

30% Returns in a Month…Yes, you read it right

Sri Lanka is a small island country, located in the Indian Ocean, with a population of about 21 million. Because of its small size and the nature of the economy, its GDP is close to around 84 billion USD, thus putting Sri Lanka in the developing economy category. Because the capital markets are still evolving, the combined market cap of all the listed companies in the Colombo Stock Exchange amounts to just about 20 billion USD. Given the comparatively small numbers, why are we then bothering to even talk about it?

It is because Sri Lanka has been one of the best performing global markets with approximately 30% return over the course of less than a month. The Colombo Stock Exchange (CSE) has less than 300 listed companies but most of them are very small. Hence, a better gauge of the stock price performance for Sri Lankan market would be the S&P Sri Lanka 20 Index (commonly referred to as S&P SL20). It measures the performance of 20 of the largest and most liquid companies in the Sri Lankan equity market. The constituents are weighted by float‐adjusted market capitalization, subject to a single stock cap of 15%.

The S&P Sri Lanka 20 Index had closed at 2,638 on 31st December 2020 and was at 3,505 on 27th January 2021 i.e. a staggering 33% return in less than a month.

Chart 1: S&P Sri Lanka 20 Index (One Year Performance)

Source: Colombo Stock Exchange (https://www.cse.lk/)

EMAlpha Machines have been collecting news flow on the current constituents of S&P SL20 and the EMAlpha Research team tried to figure out as to what had happened and why? The first step was to look at the individual performance of each of the S&P SL20 Constituents and this is what we found,

  • 19/20 stocks have delivered positive returns YTD,
  • 9 stocks have returned between 0-20%,
  • 5 stocks returns range between 20%-40%,
  • No stocks gave returns between 40%-90%,
  • 2 stocks gave returns between 90%-100%,
  • 2 stocks yield ranged between 100%-200%,
  • The top performer has delivered 286%.

So, in a market which has returned 30% in a month, just 5/20 or only 25% of the stocks have actually led to this strong performance. Not surprising, but it is safe to say that things are heavily skewed and average return doesn’t capture the picture that accurately.

Table 1: The Stock Price Performance of S&P SL20 Constituents (As on 27th January 2021)

 

Name 

YTD Stock Price Performance (%)

1

Access Engineering

21.05%

2

Chevron Lubricants Lanka

4.26%

3

Commercial Bank of Ceylon

23.11%

4

DFCC Bank PLC

15.38%

5

Dialog Axiata PLC

4.03%

6

Dipped Products PLC

117.15%

7

Distilleries Company of Sri Lanka PLC

12.08%

8

Expolanka Holdings PLC

94.81%

9

Hatton National Bank

16.50%

10

Hayleys PLC

95.65%

11

Hemas

-1.90%

12

John Keells

14.90%

13

Lanka ORIX Leasing (LOLC Holdings)

286.30%

14

MelstaCorp PLC

31.73%

15

National Development Bank

26.79%

16

People’s Leasing & Finance

16.13%

17

Royal Ceramics Lanka PLC

135.96%

18

Sampath Bank

21.01%

19

Teejay Lanka PLC

19.69%

20

Tokyo Cement Company (LANKA) PLC

11.97%

Source: 1) Colombo Stock Exchange (https://www.cse.lk/pages/indices/indices.component.html), 2) https://www.investing.com/indices/sp-sri-lanka-20-components

What EMAlpha Research Team Did Next

1) We first looked at the Year-to-Date (YTD) Stock price performance of all 20 stocks, which are the constituents of the S&P Sri Lanka 20 Index (S&P SL20). The S&P SL20 index measures the performance of 20 of the largest and most liquid companies in the Sri Lankan equity market and hence, in our view, this was the most appropriate and relevant index to capture the performance of the Sri Lankan equity market.

2) Next, we selected the Top 5 companies in terms of their respective YTD Stock Price Performance (As on 27th January 2021) and these stocks are as follows:

  • Lanka ORIX Leasing (LOLC Holdings)  286.30%
  • Royal Ceramics Lanka PLC                    135.96%
  • Dipped Products PLC                              117.15%
  • Hayleys PLC                                              95.65%
  • Expolanka Holdings PLC                         94.81%

3) We then analysed the news flow that EMAlpha machines had picked up for all the 20 companies on a monthly basis, beginning January 2020 and ending January 2021. Finally, we zeroed in on the news flow for the last three months (November 2020, December 2020 and January 2021). To further sharpen our focus on the major drivers of the S&P SL20 Index, we took a deep dive on the news flow on the Top 5 companies, as per their performance. We analysed each and every news flow, which the EMAlpha machines had picked up, in detail to draw inferences.

What EMAlpha Research Team Noticed?

After analysing each and every bit of news flow, we found that:

1) Four of these top five performers, out of the total 20, had entered the Index in the last revision that had happened about a month ago and they are the ones pushing the markets higher. These companies are: Royal Ceramics Lanka PLC, Dipped Products PLC, Hayleys PLC and Expolanka Holdings PLC.

2) Two of these companies were direct beneficiaries of Covid-19 pandemic (manufacturer of rubber gloves etc.) and they were: Hayleys PLC and Dipped Products (Dipped is actually a subsidiary of Hayleys).

3) Another company also had exceptional tail winds because of the Covid-19 pandemic. It was Expolanka Holdings, which massively benefited from exports to North America.

4) Three companies had one-off events which increased investor interest and helped boost their stocks: LOLC Holdings had restructuring and consolidated all the finance companies under one company.  Hayleys and Dipped had stock splits.

5) Royal Ceramics was a strange case and other than its inclusion in S&P SL20, there was not much news flow on the company. There was only one reference to a new manufacturing plant being opened, which appeared in January 2021.

6) The other very interesting thing was that the news flow, in general was extremely positive and there was virtually no negative news on companies and also no critical reviews.

7) One other thing that EMAlpha machines noticed was that the news was mostly about reporting of events and there was not much substance in terms of analysis and independent assessment.

Conclusions

Having done our due diligence, in regards analysing the available data, we concluded that:

1) The 30% rally, over the course of less than a month, was triggered by two major events: The first was the S&P SL 20 revision and inclusion of some stocks which garnered investor’s buying interest. The second was the Covid-19 pandemic due to which some of these companies found themselves ‘at the right time and at the right place’.

2) Because of factors like rubber plantation in the country, companies like Dipped and Hayleys were the beneficiaries. Similarly, the prevailing circumstances have also been extremely favourable for Expolanka.

3) Events like Restructuring (in case of LOLC Holdings) and Stock Splits (Dipped and Hayleys), which are not regular occurrences, have also contributed to this rise.

 

In conclusion, we believe that because of the aforementioned reasons that have propelled the recent highs, the positive momentum is unlikely to sustain. While we can’t forecast market correction, we think that the returns in the near term will be more subdued.

How EMAlpha’s analysis of unstructured data can help Investors on Sri Lanka?

Given the current bullish scenario, the question that comes up is that, how can investors take advantage of the prevailing market conditions? It is here that EMAlpha’s analysis of unstructured data becomes a much-needed tool. These are two major components wherein EMAlpha can aid investors when it comes to investing in the Sri Lankan market.

1) The news analysis can be tracked for the companies experiencing tailwinds in order to make an assessment on the chances of their inclusion in S&P SL20 during the next revision. They are potentially going to do better when it comes to their stock price performance.

2) The unstructured data analysis in other geographies can also be used to assess the potential impact on some of the larger companies in Sri Lanka. Case in point being Top Gloves from Malaysia which is very similar to Dipped Products in terms of the opportunity that was created because of the Covid-19 pandemic.

Appendix 1 – Important News Items for 5 companies

Dipped Products PLC

 

Dipped Products PLC (DIPD) is an integrated rubber glove manufacturer and exporter. DIPD is one of the largest companies in the world in protective hand wear.

November

  1. COVID catapults Dipped Products 1H after-tax profit by 545% to Rs. 2.1 bn (5th November 2020, COVID catapults Dipped Products 1H after-tax profit by 545% to Rs. 2.1 b | Daily FT)
  2. Dipped Products PLC also witnessed foreign selling (5th November 2020, Demand soars for Expolanka shares – The Island)
  3. Dipped Products PLC, emerged a winner during the September quarter with its revenues and earnings surging amid higher demand for rubber gloves. (6th November 2020, Daily Mirror – Hayleys group rubber glove maker sees surge in 2Q sales and earnings)
  4. Strong earnings of key businesses led to a significant increase in the share prices and trading activity of Dipped Products PLC signaling positive investor sentiments. (11th November 2020, Hayleys Group posts record profit for 1H | Daily News)
  5. High net worth and institutional investor participation in Dipped Products helping the stock. (12th November 2020, http://www.ft.lk/front-page/Stock-market-returns-to-resilience-despite-profit-taking/44-708830)
  6. Retail interest was noted in Dipped Products (18th November 2020, Bourse gives early thumbs up for Budget 2021 | Daily FT)

December

 

  1. Standard Chartered Sri Lanka said it had financed personal protective equipment manufacture for export at Sri Lanka’s Dipped Products. (3rd December 2020, Standard Chartered Sri Lanka finances PPE export production | EconomyNext )
  2. Dipped Products enter S&P SL20 (18th December 2020, Dipped Products, Distilleries, Expolanka, Hayleys, Hemas, Royal Ceramics and Tokyo Cement enter S&P SL20 – Adaderana Biz English | Sri Lanka Business News )
  3. Inclusion of new companies in S&P SL20 index impacts CSE positively (22nd December 2020, Inclusion of new companies in S&P SL20 index impacts CSE positively – The Island )
  4. Among the other Sri Lankan companies which were honoured at this year’s event with awards and certificates were:  Dipped Products PLC. (30th December 2020) 16 SL companies excel at SAFA best presented Annual Report Awards – Lanka Business Online
  5. Constituent changes to the S&P Sri Lanka 20 Index (27th December 2020, Constituent changes to the S&P Sri Lanka 20 Index | Sunday Observer )

January

  1. Dipped Products announced share splits (21st January 2021, Sri Lanka stocks hit new all time high after Hayleys group share splits | EconomyNext )
  2. Hayleys Group announces massive share sub division (21st January 2021, Hayleys Group announces massive share sub division – Adaderana Biz English | Sri Lanka Business News
  3. Hayleys Group drives bullish market (22nd January 2021, Hayleys Group drives bullish market – The Island )
  4. Dhammika drives stock market to dizzy heights with mega share sub-division move (22nd January 2021, Dhammika drives stock market to dizzy heights with mega share sub-division move | Daily FT )

Hayleys PLC

Hayleys PLC is the leading conglomerate in Sri Lanka with diversified subsidiaries and business interests in multiple sectors and a global footprint.

November

  1. Hayleys group rubber glove maker sees surge in 2Q sales and earnings (6th November 2020, Daily Mirror – Hayleys group rubber glove maker sees surge in 2Q sales and earnings)
  2. The Hayleys Group delivered a record profit in the first six months of FY 2020/21 and the period under review reflects the strongest six months performance in the Group’s operating history. (11th November 2020, Hayleys Group posts record profit for 1H | Daily News)
  3. Exports propel Hayleys 2Q as pandemic upends its fortunes (11th November 2020, Daily Mirror – Exports propel Hayleys 2Q as pandemic upends its fortunes)

December

 

  1. Standard Chartered Sri Lanka said it had financed personal protective equipment manufacture for export at Sri Lanka’s Dipped Products. (3rd December 2020, Standard Chartered Sri Lanka finances PPE export production | EconomyNext )
  2. Hayleys enter S&P SL20 (18th December 2020, Dipped Products, Distilleries, Expolanka, Hayleys, Hemas, Royal Ceramics and Tokyo Cement enter S&P SL20 – Adaderana Biz English | Sri Lanka Business News )
  3. HNB PLC yesterday announced the commencement of multiple long-term finance facilities totalling Rs.8.5 billion for Hayleys PLC and the group subsidiaries. (18th December 2020, Daily Mirror – HNB signs up for Rs.8.5bn in long-term funding facilities with Hayleys )
  4. Inclusion of new companies in S&P SL20 index impacts CSE positively (22nd December 2020, Inclusion of new companies in S&P SL20 index impacts CSE positively – The Island )
  5. Constituent changes to the S&P Sri Lanka 20 Index (27th December 2020, Constituent changes to the S&P Sri Lanka 20 Index | Sunday Observer )

January

  1. EPF sheds 38% of its stake in Hayleys to book profit (11th January, EPF sheds 38% of its stake in Hayleys to book profit | Daily FT )
  2. Sri Lanka stocks hit new all time high after Hayleys group share splits (21st January 2021, Sri Lanka stocks hit new all time high after Hayleys group share splits | EconomyNext )
  3. Hayleys Group announces massive share sub division (21st January 2021, Hayleys Group announces massive share sub division – Adaderana Biz English | Sri Lanka Business News
  4. Hayleys Group drives bullish market (22nd January 2021, Hayleys Group drives bullish market – The Island )
  5. Dhammika drives stock market to dizzy heights with mega share sub-division move (22nd January 2021, Dhammika drives stock market to dizzy heights with mega share sub-division move | Daily FT )
  6. Hayleys and LOLC take the honours in LMD 100 rankings (22nd January 2021, Hayleys and LOLC take the honours in LMD 100 rankings | Daily FT )

 

Expolanka Holdings PLC

 

Expolanka Holdings is a global diversified conglomerate specializing in three key areas: logistics, leisure and investments.

 

November

  1. Most investors are now rallying round Expolanka stocks (5th November 2020, Demand soars for Expolanka shares – The Island)
  2. Expolanka Holdings PLC secured exceptionally strong top and bottom line growth during the quarter ended 30 September 2020 (9th November 2020, Expolanka records revenue of Rs.49Bn and PAT of Rs.4.5Bn in Q2 FY 2021 – Lanka Business Online)
  3. Expolanka said fuelled by surging demand for emergency supplies via air freight into North American markets, revenue expanded 71% YoY while profit after tax (PAT) was Rs. 4.5 bn. (10th November 2020, Expolanka records revenue of Rs. 49 b and PAT of Rs. 4.5 b in 2Q | Daily FT )
  4. Retail interest was noted in Expolanka Holdings (18th November 2020, Bourse gives early thumbs up for Budget 2021 | Daily FT )

December

 

  1. Expolanka enter S&P SL20 (18th December 2020, Dipped Products, Distilleries, Expolanka, Hayleys, Hemas, Royal Ceramics and Tokyo Cement enter S&P SL20 – Adaderana Biz English | Sri Lanka Business News )
  2. Inclusion of new companies in S&P SL20 index impacts CSE positively (22nd December 2020, Inclusion of new companies in S&P SL20 index impacts CSE positively – The Island )
  3. Constituent changes to the S&P Sri Lanka 20 Index (27th December 2020, Constituent changes to the S&P Sri Lanka 20 Index | Sunday Observer )

January

  1. Being a consistently sought-after stock, Investor interest on Expolanka has been on its phenomenal performance thanks being on the right side of the COVID-19 pandemic – logistics. (21st January 2021, Expolanka rises to 4th most valuable stock; tops Rs. 100 b mark | Daily FT)

Lanka ORIX Leasing (LOLC Holdings)

 

LOLC Holdings PLC is a non-banking financial institution which offers various financial products and services. LOLC is one of the largest and most diversified conglomerates in Sri Lanka.

 

November

 

  1. Sri Lanka’s multi-geographic, multicurrency and multicultural financial conglomerate LOLC Holdings PLC is planning to make forays into new countries while further strengthening its existing businesses. (5th November 2020, LOLC to further expand its global footprint – Adaderana Biz English | Sri Lanka Business News)
  2. Diversified conglomerate LOLC Holdings PLC’s focus on overseas expansion has allowed the group to emerge as the most profitable listed entity for two consecutive years. (6th November 2020, Daily Mirror – LOLC credits impressive financial performance to global expansion )
  3. LOLC Holdings introduces game-changing digital initiatives (6th November 2020, Business resiliency: How 5 Sri Lankan companies are reimagining operations | Daily FT )
  4. LOLC’s iPay to expand to Myanmar, Pakistan and Indonesia (12th November 2020, Daily Mirror – LOLC’s iPay to expand to Myanmar, Pakistan and Indonesia )

December

 

  1. LOLC paid no dividends for past several years to fund overseas expansion (13th December 2020  http://island.lk/lolc-paid-no-dividends-for-past-several-years-to-fund-overseas-expansion-ishara/ )
  2. Sri Lanka’s LOLC says Serendib acquisition will strengthen post-Covid-19 leisure business (15th December 2020, Sri Lanka’s LOLC says Serendib acquisition will strengthen post-Covid-19 leisure business | EconomyNext )
  3. LOLC Holdings PLC’s strategic Investment arm, Browns Investments PLC (BI), acquired the controlling stake of 55.65% of Serendib Hotel PLC (17th December 2020, Browns Investments expands leisure sector –acquires Serendib Hotels – The Island )
  4. Sri Lanka’s LOLC Finance’s ICRA rating confirmed (25th December 2020, Sri Lanka’s LOLC Finance’s ICRA rating confirmed at [SL]A | EconomyNext )

January

  1. Stock market turnover crosses Rs.9.1bn: LOLC Group accounts for bulk (8th January 2021, Daily Mirror – Stock market turnover crosses Rs.9.1bn: LOLC Group accounts for bulk )
  2. LOLC designates ‘LOLC Ceylon Holdings’ to attract large foreign investors to its finance companies (12th January 2021, LOLC designates ‘LOLC Ceylon Holdings’ to attract large foreign investors to its finance companies – Adaderana Biz English | Sri Lanka Business News )
  3. LOLC Group restructuring viewed as a global strategy to attract investors (13th January 2021, LOLC Group restructuring viewed as a global strategy to attract investors – The Island )
  4. LOLC Holdings PLC is to consolidate all its finance companies into a new listed entity and will hold all the key stakes, a move the company said was to attract large foreign investors. (13th January 2021, LOLC to consolidate finance companies, float holding company | Daily FT )
  5. Hayleys and LOLC take the honours in LMD 100 rankings (22nd January 2021, Hayleys and LOLC take the honours in LMD 100 rankings | Daily FT )
  6. Ishara’s LOLC becomes third one billion dollar company on CSE (27th January 2021, Daily Mirror – Ishara’s LOLC becomes third one billion dollar company on CSE )
  7. Sri Lanka stocks in new high, LOLC Holdings becomes most valuable firm (27th January 2021, Sri Lanka stocks in new high, LOLC Holdings becomes most valuable firm | EconomyNext )
  8. LOLC latest to be worth $ 1 b on CSE (27th January 2021, LOLC latest to be worth $ 1 b on CSE | Daily FT )
  9. LOLC Holdings, third $ 1 billion company at CSE (28th January 2021, LOLC Holdings, third $ 1 billion company at CSE – The Island )

 

Royal Ceramics Lanka PLC

Royal Ceramics Lanka PLC is a leading manufacturer of wall tiles, floor tiles and bathroom fixtures. The Company manufactures and retails porcelain and ceramic tiles under the brand name Rocell.

 

November

 

December

 

  1. Royal Ceramics enter S&P SL20 (18th December 2020, Dipped Products, Distilleries, Expolanka, Hayleys, Hemas, Royal Ceramics and Tokyo Cement enter S&P SL20 – Adaderana Biz English | Sri Lanka Business News )
  2. Inclusion of new companies in S&P SL20 index impacts CSE positively (22nd December 2020, Inclusion of new companies in S&P SL20 index impacts CSE positively – The Island )
  3. Constituent changes to the S&P Sri Lanka 20 Index (27th December 2020, Constituent changes to the S&P Sri Lanka 20 Index | Sunday Observer )

 

January

  1. Royal Ceramics to commission new tile making plant targeting price-sensitive market segment (7th January 2021, Daily Mirror – Royal Ceramics to commission new tile making plant targeting price-sensitive market segment )

Appendix 2 – News Items Analysed for 5 companies from November 2020 to January 2021

  1. Nov-20   http://www.ft.lk/front-page/Stock-market-returns-to-resilience-despite-profit-taking/44-708830
  2. Nov-20   http://www.ft.lk/front-page/COVID-catapults-Dipped-Products-1H-after-tax-profit-by-545-to-Rs-2-1-b/44-708506
  3. Nov-20   http://www.ft.lk/front-page/Bourse-gives-early-thumbs-up-for-Budget-2021/44-709065
  4. Nov-20   http://www.dailymirror.lk/business-news/Hayleys-group-rubber-glove-maker-sees-surge-in-2Q-sales-and-earnings/273-199331
  5. Nov-20   http://www.ft.lk/front-page/Stock-market-strengthens-further-ASPI-returns-to-6-000-point-level/44-708555
  6. Nov-20   http://www.ft.lk/front-page/Mature-investor-behaviour-prevents-sharper-fall-of-stock-market/44-708380
  7. Nov-20   http://www.ft.lk/front-page/Colombo-stock-market-ends-November-with-9-gain/44-709591
  8. Nov-20   http://www.dailynews.lk/2020/11/11/finance/233353/hayleys-group-posts-record-profit-1h
  9. Nov-20   http://www.ft.lk/front-page/Budget-blues-haunt-stock-market/44-709307
  10. Nov-20   http://island.lk/demand-soars-for-expolanka-shares/
  11. Nov-20   https://www.lankabusinessonline.com/expolanka-records-revenue-of-rs-49bn-and-pat-of-rs-4-5bn-in-q2-fy-2021/
  12. Nov-20   http://www.ft.lk/front-page/Hanif-Yusoof-sadvice-to-my-younger-self/44-709098
  13. Nov-20   https://economynext.com/sri-lanka-stocks-end-higher-75580/
  14. Nov-20   http://www.ft.lk/front-page/Bourse-gives-early-thumbs-up-for-Budget-2021/44-709065
  15. Nov-20   http://www.ft.lk/front-page/Stock-market-rebounds-gains-turnover/44-708447
  16. Nov-20   http://www.ft.lk/front-page/Mature-investor-behaviour-prevents-sharper-fall-of-stock-market/44-708380
  17. Nov-20   https://economynext.com/sri-lanka-stocks-gain-2-2-pct-at-close-75541/
  18. Nov-20   http://www.ft.lk/front-page/Colombo-stock-market-ends-November-with-9-gain/44-709591
  19. Nov-20   https://economynext.com/sri-lanka-stocks-down-0-2-pct-75494/
  20. Nov-20   http://www.ft.lk/front-page/Expolanka-records-revenue-of-Rs-49-b-and-PAT-of-Rs-4-5-b-in-2Q/44-708720
  21. Nov-20   https://economynext.com/sri-lanka-stocks-end-lower-76258/
  22. Nov-20   http://www.dailymirror.lk/business-news/Exports-propel-Hayleys-2Q-as-pandemic-upends-its-fortunes/273-199637
  23. Nov-20   http://www.sundayobserver.lk/2020/11/15/business/bank-ceylon-walasmulla-branch-moves-own-building
  24. Nov-20   http://www.sundayobserver.lk/2020/11/08/business/%E2%80%9Cnegligence-agri-sector-setback-economy%E2%80%9D
  25. Nov-20   https://economynext.com/sri-lanka-stocks-end-higher-75580/
  26. Nov-20   http://www.dailymirror.lk/business-news/Hayleys-group-rubber-glove-maker-sees-surge-in-2Q-sales-and-earnings/273-199331
  27. Nov-20   http://www.sundayobserver.lk/2020/11/22/business/microsoft-unveils-initiative-support-startups
  28. Nov-20   https://economynext.com/sri-lanka-stocks-gain-2-2-pct-at-close-75541/
  29. Nov-20   http://www.ft.lk/front-page/Shares-end-at-10-month-high-on-industrials-financials-boost/44-708599
  30. Nov-20   https://economynext.com/sri-lanka-stocks-end-week-1-pct-higher-75637/
  31. Nov-20   https://economynext.com/sri-lanka-stocks-end-higher-76302/
  32. Nov-20   http://island.lk/cse-companies-trying-out-a-range-of-business-strategies/
  33. Nov-20   http://www.dailymirror.lk/business-news/LOLC-credits-impressive-financial-performance-to-global-expansion/273-199330
  34. Nov-20   http://www.ft.lk/it-telecom-tech/Business-resiliency-How-5-Sri-Lankan-companies-are-reimagining-operations/50-708532
  35. Nov-20   http://www.dailymirror.lk/business-news/LOLCs-iPay-to-expand-to-Myanmar-Pakistan-and-Indonesia/273-199724
  36. Nov-20   http://bizenglish.adaderana.lk/lolc-to-further-expand-its-global-footprint/
  37. Nov-20   http://www.ft.lk/front-page/Mature-investor-behaviour-prevents-sharper-fall-of-stock-market/44-708380
  38. Nov-20   https://economynext.com/sri-lanka-stocks-down-0-2-pct-75494/
  39. Nov-20   https://economynext.com/sri-lanka-stocks-end-lower-75933/
  40. Nov-20   https://economynext.com/sri-lanka-stocks-end-1-02-pct-higher-on-melstacorp-com-bank-and-carson-cumberbatch-76434/
  41. Nov-20   http://www.ft.lk/front-page/Shares-end-at-10-month-high-on-industrials-financials-boost/44-708599
  42. Nov-20   https://economynext.com/sri-lanka-stocks-end-week-1-pct-higher-75637/
  43. Dec-20   http://bizenglish.adaderana.lk/dipped-products-distilleries-expolanka-hayleys-hemas-royal-ceramics-and-tokyo-cement-enter-sp-sl20/
  44. Dec-20   https://www.lankabusinessonline.com/16-sl-companies-excel-at-safa-best-presented-annual-report-awards/
  45. Dec-20   http://island.lk/jkh-expolanka-and-hemas-holdings-shares-appreciate/
  46. Dec-20   http://island.lk/hybrid-wind-and-solar-energy-park/
  47. Dec-20   https://economynext.com/standard-chartered-sri-lanka-finances-ppe-export-production-76544/
  48. Dec-20   http://bizenglish.adaderana.lk/standard-chartered-supports-sri-lankas-economic-recovery-via-financing-facilities-for-ppe-manufacturers/
  49. Dec-20   http://island.lk/inclusion-of-new-companies-in-sp-sl20-index-impacts-cse-positively/
  50. Dec-20   https://economynext.com/sri-lanka-stocks-up-10-5-pct-in-2020-share-values-gain-rs109bn-77431/
  51. Dec-20   http://www.ft.lk/front-page/Stock-Market-reaches-3-year-high/44-710037
  52. Dec-20   http://www.dailymirror.lk/business-news/StanChart-provides-financing-to-Lankan-PPE-manufacturers-to-enhance-capacity/273-201056
  53. Dec-20   http://bizenglish.adaderana.lk/dipped-products-distilleries-expolanka-hayleys-hemas-royal-ceramics-and-tokyo-cement-enter-sp-sl20/
  54. Dec-20   http://www.ft.lk/front-page/Stock-market-gains-to-30-month-high-turnover-to-over-3-week-peak/44-709760
  55. Dec-20   https://economynext.com/sri-lanka-stocks-end-higher-77364/
  56. Dec-20   https://economynext.com/sri-lanka-stocks-close-1-19-pct-higher-on-hatton-national-bank-telecom-and-asian-hotels-76650/
  57. Dec-20   https://economynext.com/sri-lanka-rupee-close-firmer-bond-yields-down-76592/
  58. Dec-20   https://economynext.com/sri-lanka-stocks-close-0-3-pct-with-interest-in-lolc-units-76962/
  59. Dec-20   http://www.ft.lk/front-page/Upward-momentum-continues-at-CSE-as-ASPI-crosses-6-500-points-level/44-709955
  60. Dec-20   https://economynext.com/sri-lanka-stocks-end-lower-77183/
  61. Dec-20   https://economynext.com/sri-lanka-stocks-up-0-6-pct-76872/
  62. Dec-20   https://economynext.com/sri-lanka-stocks-end-higer-77320/
  63. Dec-20   http://bizenglish.adaderana.lk/dipped-products-distilleries-expolanka-hayleys-hemas-royal-ceramics-and-tokyo-cement-enter-sp-sl20/
  64. Dec-20   http://www.sundayobserver.lk/2020/12/27/business/mercedes-benz-ag-recognises-dimo-service-excellence-south-east-asia
  65. Dec-20   http://www.dailymirror.lk/business-news/HNB-signs-up-for-Rs-8-5bn-in-long-term-funding-facilities-with-Hayleys/273-202049
  66. Dec-20   https://economynext.com/standard-chartered-sri-lanka-finances-ppe-export-production-76544/
  67. Dec-20   http://www.ft.lk/business/Hayleys-Fabric-launches-new-line-of-organic-eco-friendly-fabrics-to-INNO-range/34-710739
  68. Dec-20   http://island.lk/associated-motor-finance-and-arpico-finance-merger-on-the-cards/
  69. Dec-20   http://island.lk/indias-top-car-maker-maruti-to-roll-out-compact-suv-on-baleno-platform/
  70. Dec-20   https://economynext.com/sri-lanka-stocks-end-lower-77183/
  71. Dec-20   https://economynext.com/sri-lanka-stocks-end-higer-77320/
  72. Dec-20   https://economynext.com/sri-lanka-stocks-end-higher-76737/
  73. Dec-20   https://economynext.com/sri-lankas-lolc-says-serendib-acquisition-will-strengthen-post-covid-19-leisure-business-76925/
  74. Dec-20   https://economynext.com/sri-lanka-stocks-close-0-3-pct-with-interest-in-lolc-units-76962/
  75. Dec-20   http://island.lk/browns-investments-expands-leisure-sector-acquires-serendib-hotels/
  76. Dec-20   http://island.lk/hhl-sells-shareholding-in-serendib-hotel-to-eden-hotel-lanka-for-rs-791-7-million/
  77. Dec-20   http://island.lk/lolc-paid-no-dividends-for-past-several-years-to-fund-overseas-expansion-ishara/
  78. Dec-20   https://economynext.com/sri-lankas-lolc-finances-icra-rating-confirmed-at-sla-77245/
  79. Dec-20   http://bizenglish.adaderana.lk/port-city-colombo-secures-lolcs-and-checs-investment-sets-the-stage-for-the-one-billion-dollar-colombo-international-financial-centre/
  80. Dec-20   https://economynext.com/sri-lanka-stocks-end-3-week-rally-76924/
  81. Dec-20   http://www.dailymirror.lk/business-news/LOLC-Group-acquires-Serendib-Hotels-from-Hemas-for-Rs-792mn/273-201923
  82. Dec-20   http://bizenglish.adaderana.lk/dipped-products-distilleries-expolanka-hayleys-hemas-royal-ceramics-and-tokyo-cement-enter-sp-sl20/
  83. Dec-20   https://www.sundayobserver.lk/2020/12/27/business/constituent-changes-sp-sri-lanka-20-index
  84. Jan-21    https://economynext.com/sri-lanka-stocks-hit-new-all-time-high-after-hayleys-group-share-splits-78083/
  85. Jan-21    https://economynext.com/sri-lanka-stocks-fall-0-3-pct-on-profit-taking-78222/
  86. Jan-21    http://island.lk/fully-subscribed-rights-issue-of-prime-finance-bolsters-its-core-capital/
  87. Jan-21    http://bizenglish.adaderana.lk/cses-aspi-surpasses-8000-points-for-the-first-time-history/
  88. Jan-21    http://www.ft.lk/front-page/Investors-switch-to-buying-again–stock-market-rebounds-after-early-fall/44-711926
  89. Jan-21    http://www.ft.lk/front-page/ASPI-takes-a-breather-turnover-still-robust-at-Rs-11-4-b/44-712194
  90. Jan-21    http://www.ft.lk/front-page/ASPI-records-highest-single-day-jump/44-712028
  91. Jan-21    http://island.lk/hayleys-group-drives-bullish-market/
  92. Jan-21    http://island.lk/bull-run-on-cse-acquires-further-momentum/
  93. Jan-21    http://island.lk/cse-running-a-sustained-bull-market/
  94. Jan-21    http://www.ft.lk/front-page/Expolanka-rises-to-4th-most-valuable-stock-tops-Rs-100-b-mark/44-711925
  95. Jan-21    https://economynext.com/sri-lanka-stocks-end-higher-77649/
  96. Jan-21    http://www.dailymirror.lk/business-news/Key-changes-in-top-25-market-cap-companies-in-2020/273-203141
  97. Jan-21    http://www.ft.lk/front-page/Colombo-stock-market-s-buoyancy-continues/44-711516
  98. Jan-21    http://www.ft.lk/front-page/Stock-Market-turnover-soars-to-new-high-of-Rs-9-1-b/44-711360
  99. Jan-21    https://economynext.com/sri-lanka-stocks-end-2-73-pct-higher-78183/
  100. Jan-21    https://economynext.com/sri-lanka-stocks-soar-3-9-pct-rupee-slides-in-excess-liquidity-77890/
  101. Jan-21    https://economynext.com/sri-lanka-stocks-end-2-pct-higher-77790/
  102. Jan-21    https://economynext.com/sri-lanka-stocks-up-1-8-pct-77738/
  103. Jan-21    https://economynext.com/sri-lanka-stocks-end-first-week-of-2021-higher-77689/
  104. Jan-21    https://economynext.com/sri-lanka-stocks-hit-new-all-time-high-after-hayleys-group-share-splits-78083/
  105. Jan-21    https://economynext.com/sri-lanka-stocks-fall-0-3-pct-on-profit-taking-78222/
  106. Jan-21    http://bizenglish.adaderana.lk/hayleys-group-announces-massive-share-sub-division/
  107. Jan-21    http://www.sundayobserver.lk/2021/01/24/business/hayleys-solar-install-solar-system-fantasia-factory
  108. Jan-21    http://www.sundayobserver.lk/2021/01/17/business/hnb-provide-long-term-funding-facilities-hayleys
  109. Jan-21    https://economynext.com/sri-lanka-stocks-soar-3-9-pct-rupee-slides-in-excess-liquidity-77890/
  110. Jan-21    http://www.sundayobserver.lk/2021/01/24/business/slt-mobitel-provide-connectivity-solutions-microbusiness
  111. Jan-21    http://www.ft.lk/front-page/EPF-sheds-38-of-its-stake-in-Hayleys-to-book-profit/44-711479
  112. Jan-21    http://www.ft.lk/front-page/Dhammika-drives-stock-market-to-dizzy-heights-with-mega-share-sub-division-move/44-711984
  113. Jan-21    https://economynext.com/sri-lanka-stocks-close-up-0-9-pct-driven-by-banks-78063/
  114. Jan-21    http://www.dailymirror.lk/business-news/Isharas-LOLC-becomes-third-one-billion-dollar-company-on-CSE/273-204566
  115. Jan-21    http://www.ft.lk/front-page/LOLC-to-consolidate-finance-companies-float-holding-company/44-711540
  116. Jan-21    https://economynext.com/sri-lanka-stocks-end-higher-77649/
  117. Jan-21    http://www.dailymirror.lk/business-news/Stock-market-turnover-crosses-Rs-9-1bn-LOLC-Group-accounts-for-bulk/273-203350
  118. Jan-21    http://island.lk/lolc-group-restructuring-viewed-as-a-global-strategy-to-attract-investors/
  119. Jan-21    https://economynext.com/sri-lanka-stocks-in-new-high-lolc-holdings-becomes-most-valuable-firm-78266/
  120. Jan-21    http://www.ft.lk/front-page/LOLC-latest-to-be-worth-1-b-on-CSE/44-712196
  121. Jan-21    http://bizenglish.adaderana.lk/lolc-designates-lolc-ceylon-holdings-to-attract-large-foreign-investors-to-its-finance-companies/
  122. Jan-21    http://www.ft.lk/front-page/Hayleys-and-LOLC-take-the-honours-in-LMD-100-rankings/44-711987
  123. Jan-21    http://island.lk/lolc-holdings-third-1-billion-company-at-cse/
  124. Jan-21    http://www.dailymirror.lk/business-news/Royal-Ceramics-to-commission-new-tile-making-plant-targeting-price-sensitive-market-segment/273-203289

 

Appendix 3 – EMAlpha Products and Services

In most Emerging Markets, information discovery is a major challenge. For example, even if global investors do show interest, how do they solve the problem of timely access to information? The world’s largest capital allocators hold USD 60 trillion and they include GPIF (Japan), GPF (Norway), ADIA (Abu Dhabi), GIC (Singapore) etc. However, only 10% of the capital gets allocated to EMs and ~90% goes to G10. The big hurdle for FDI and FPI in EMs is: Foreign investors cannot access relevant local information in a timely fashion.

Most market participants and investors from across the world realise that the low rates in G10 makes EM attractive for investors. But, a) Information access is usually a cost and time intensive process for investors, and b) In many EMs, language is a big barrier and because of multiple regional languages, there is a significant delay before news makes it to the mainstream English language. To address these issues, you need solutions like, a) Real time news collection from multiple languages and, b) Instantaneous machine translation and text analytics leading to actionable recommendations for investors.

There are also challenges like ensuring that companies behave responsibly and that they adopt sustainable business practices. Also, there is a need to ensure that the investors are contributing towards making the world a better place by making investment decisions which reward responsible behaviour of companies. Case in point, ESG (Environmental, Social & Governance) which is increasingly being used as a filter for investment decisions. There are other issues as well such as which data to use and there is also no standard framework for evaluation.

Some of these issues are too important to be postponed to a later date and it is in this regard that EMAlpha is making its contribution. For example, EMAlpha has developed a Flexible ESG Framework Management System which is a proprietary technology that makes ESG scores framework agnostic, thus allowing for quick adaptation. In addition, the users decide what matters to them and the EMAlpha system does a classification into E, S, G and more granular categories.

EMAlpha also has solutions for Multilingual data collection and real time targeted information which are based on proprietary processes to collect relevant data across multiple markets. The coverage expands across Emerging market equity, currencies and commodities and the work has also been very successful in testing the signals in some key markets for live trading strategies. This is a continuous cycle and a virtuous loop that allows for iterative improvement through AI-human feedback.

With developments in AI and technology in areas like NLP, there are considerable new possibilities to bridge the gap in information between Emerging Markets and the more Developed markets. This is an area which is turning out to be very exciting because some of the tools mentioned were not available even a couple of years ago. This implies that the evolution in the field will only get faster as time goes on. While the Emerging Markets and the Capital Flow Conundrum is a complex one, there is now much more hope and optimism that with the usage of technology, things will only get better.

At EMAlpha, the ESG team is doing more research on why some issues like Social get more prominence as compared to others like Environmental or Governance issues. To look at specific cases in the context of ESG is a very intense yet interesting exercise and this has been an incredible learning experience for the EMAlpha Research team. The data, information and ratings are a humongous challenge for ESG and it takes time to reach to the depth of the issues as the field is evolving very quickly.

EMAlpha is making a solid contribution in tackling these challenges. EMAlpha has solutions for ESG which are practical, user friendly and although not too simplistic yet easy to use. EMAlpha has developed a Flexible ESG Framework Management System which is a proprietary technology that makes ESG scores framework agnostic, thus allowing for quick adaptation. In addition, the users decide what matters to them and the EMAlpha system does a classification into E, S, G and more granular categories.

We strongly believe that the entire ESG ecosystem requires multiple stakeholders to pull in the right direction in order to make it operational and that will be the most critically determining factor for ESG’s success in making the corporate responsibility actually work. Most importantly, the investors should see ‘E’, ‘S’ and ‘G’ separately and should not really mix issues when it comes to the comprehensive ESG evaluation. It is important to understand the right reasons behind ESG investing because this bias could hurt their investment decision making and portfolio performance.

 

 

 

Research Team

EM Alpha LLC

For more EMAlpha Insights on Emerging Markets, please visit https://emalpha.com/insights/. To know how you can use EMAlpha’s unstructured data and ESG (Environmental, Social and Governance) solutions for better investment decisions, please send us an email at research@emalpha.com.

About EMAlpha:

EMAlpha, a data analytics and investment management firm focused on making Emerging Markets (EMs) more accessible to global investors and unlocking EM investing using machines. EMAlpha’s focus is on Unstructured Data as the EMs are particularly susceptible to swings in news flow driven investor sentiment. EMAlpha works on information discovery and ESG solutions for Investors in Emerging Markets, using AI and NLP tech. Our mission is: “To help increase capital flow, in terms of FDI and FPI, to Emerging Markets by lowering information barriers using AI/NLP”. EMAlpha Products help achieve both alpha and ESG solutions and the idea is to help asset allocators, asset managers, banks and hedge funds along with companies with cost and time efficient access to relevant information. We use thoroughly researched machine learning tools to track evolving sentiment specifically towards EMs and EMAlpha pays special attention to the timely measurement of news sentiment for investors as these markets can be finicky and sentiment can be capricious. Our team members have deep expertise in research and trading in multiple Emerging Markets and EMAlpha’s collaborative approach to combining machine learning tools with a fundamental approach help us understand these markets better.

Disclaimer:
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