DNH Financial (Pvt) Ltd.

Daily
22nd September 2011
Market Performance
ASPI MPI Turnover (bn) Foreign Purchases (mn) Foreign Sales (mn) Traded Companies Market PER (X) Market Cap (LKR bn) Market Cap (US$ bn) Dividend Yield (%) Price to Book (X) 22.09.2011 6,762 6,108 1.9 89.5 700.1 230 17.6 2,428 21.8 1.5 2.2 21.09.2011 6,793 6,138 2.0 127.6 120.6 225 18.3 2,439 22.0 1.5 2.3 %Chg. -0.4 -0.5 -6.0 -29.8 480.3 2.2 -3.8 -0.4 -0.6 0.0 -4.3

DNH MARKET WATCH

www.dnhfinancial.com +94115700777

Market Indices
7,000 6,800 6,600 6,400 6,200 6,000 15/9/2011 16/9/2011 20/9/2011 21/9/2011 22/9/2011 ASI MPI

Market Outlook The market continued in downward trajectory with the ASPI and MPI losing 0.4% and 0.5% to close at 6762 and 6108 respectively. Turnover at LKR1.9 bn (-0.6%YoY), remained broadly at the same levels as the past few days. The only significant trading for the day was 625mn shares of Lanka Orix Finance changing hands which accounted for 33% of the days total. Losers once again outpaced winners with J.L. morison, Chemanex and Convenience Foods declining by 10.8%, 10.6% and 7.7% offsetting gains in Regnis (Lanka), Udapussellawa Plantations and Gestetner which advanced by 19.6%, 17.9% and 16.1% respectively. It was a bloodbath meanwhile for global markets with the majority recorded steep declines as a result of a pessimistic assessment of the US economy by the Fed yesterday. Hong Kongs Hang Seng plunged 4.9%, Japans Nikkei by 2.1%, South Korea's Kospi by 2.6% while Australia's S&P ASX 200 was also down by 2.6%. Commodities were not spared either with gold futures falling by 2.9% to $1,771.80 an ounce.
Flight to quality While the current lull in the market may appear somewhat discouraging to those whom may historically be used to far more upbeat momentum, we advise investors to take advantage of any price weakness and build a robust portfolio of quality stocks that will outperform once the momentum for the 3Q2011 corporate results run up gathers pace. Stocks are well likely to reverse their recent losing streak sooner than later as investors realize that the majority of factors that influence market trajectory are indeed positive and that the current downward bias of the market is highly unjustified. Consequently, we advise investors to avoid the herd and start their selective stock picking.

Hang Seng Index

Gainers /Losers (%)

Sathosa Motors Convenience Foods Chemanex J.L. Morison Eastern Merchants Gestetner Udapussellawa Plantations Regnis (Lanka)

-7.6 -7.7 -10.6 -10.8 11.8 16.1 17.9 19.6

Significant Trades (Turnover in LKR Mn)

700 600 500 400 300 200 100 0 LOFC REG RGEM COLO

Global Markets
Sri Lanka - ASPI India - Sensex Pakistan - KSE 100 Taiwan Weighted Singapore - Straits Times Hong Kong - Hang Seng Index 6762 16361 11690 7306 2721 17912 %Chg. -0.45 -4.13 -1.36 -3.06 -2.55 -4.85

Interest Rates & Currencies

Prime Lending Rate (Avg. Weighted) Deposit Rate (Avg. Weighted) Treasury Bill Rate (360 Days) Dollar Denominated Bond Rate LKR/US$ (Avg. Rate) LKR/EURO (Avg. Rate) 22.08.2011 22.09.2011 9.5% 6.4% 7.3% 6.3% 111.1 151.5

Disclaimer
This Review is prepared and issued by DNH Financial (Pvt.) Ltd. (DNH) based on information in the public domain, internally developed and other sources, believed to be correct. Although all reasonable care has been taken to ensure the contents of the Review are accurate, DNH and/or its Directors, employees, are not responsible for the correctness, usefulness, reliability of same. DNH may act as a Broker in the investments which are the subject of this document or related investments and may have acted on or used the information contained in this document, or the research or analysis on which it is based, before its publication. DNH and/or its principal , their respective Directors, or Employees may also have a position or be otherwise interested in the investments referred to in this document. This is not an offer to sell or buy the investments referred to in this document. This Review may contain data which are inaccurate and unreliable. You hereby waive irrevocably any rights or remedies in law or equity you have or may have against DNH with respect to the Review and agree to indemnify and hold DNH and/or its principal, their respective directors and employees harmless to the fullest extent allowed by law regarding all matters related to your use of this Review.