Persisting pessimistic market sentiment, saw continuous declines in price levels in the period under review.
High value banking stocks like HNB, NDB, DFCC and Commercial Bank were rather heavily hit with continuous price declines.
The bluest of blue chip companies were mainly traded in large parcels by foreign individuals and local retailers who sold out in small quantities at market prices which has brought down prices of shares disproportionately.
Even in the current economic scenario, the banking sector companies mentioned above have performed quite admirably, although incomes have not increased significantly like in past years.
Labour unrest appears to be a significant drawback in attracting foreign capital, real and portfolio investments. The recent closure of a pioneering technological industry, Bartleet Micro Devices has caused foreign investors to review the long term investment position here. The ever threatening union strikes have increased the uncertainty in the market and the general economy.
A lack of significant improvement in economic growth during the last two years could lead to skilled professionals looking for greener pastures. A possible brain drain of this nature could affect the country attracting foreign investment in technological fields.
Hotel sector share prices have been declining over the past two years, mainly because of the security situation. Room occupancy rates are less than 210%. The share prices such as those of Eden Hotels Ltd. have dropped by nearly 80%. Some of these shares are trading even below par value of Rs. 10/-, which for a long term investor, who is looking at investments of over two years, is pricewise an attractive buy.
The manufacturing sector should receive a boost when foreign collaboration comes into Lanka Cement Ltd., to resume production in their Jaffna district plant.
The short term (about 3 weeks) holds a very bleak picture, with the probability of the ASI declining even further than the expected bottoming out point of ASI 600.
As company performances this quarter are poor, fundamental ratios like PIE will be high, even at these price levels, which will result in prices of many stocks declining.
Despite the remarkable performance for the smallholder, crops are still very low in the low grown areas. The low grown tea producer is unable to get the maximum benefits from the better prices due to numerous reasons.
Since the market potential for low grown tea production seems to be enormous, it is time that the smallholder be now educated in the various aspects of cultivation.
This can only be done by widespread TV/radio and press programmes.
The Tea grower must be trained and informed of the importance of proper plucking. Some 90 percent of the plantations in Sri Lanka are not plucked properly and there lies the problem of our declining yields. Priorities would then seem to be.
(1) Soil conservation - applying green manure.
(2) Plucking
(3) Proper pruning
(4) Proper fertilizer and dolomite applications.
Ground application of fertilizer is still ill-timed. Most fertilizer obtained from the so-called smallholder societies seems to be of poor quality. (There is much money in adulteration). Fertilizer is applied on acidic soils. Around 95% of the smallholder sector does not apply dolomite. Seldom or never is Foliar spraying which will boost yields after ground applications of fertilizer.
Grow Boost is a micro nutrient that is marketed by Green Soils (Pvt) Ltd., a company specializing in fertilizer. This product has been tried out on a number of plantations. The results are quite convincing and impressive. The application of Grow Boost increases the crop by about 20%. It is also a sustained improvement. The bushes sprayed with this product also seem to go through the drought quite well. There certainly seems to be a case for the more widespread use of Grow Boost. The company also offers a comprehensive field service.
However, the smallholder must possess the infrastructure to spray not only Grow Boost but even zinc, urea, Epsom salts, sulphate of potash cocktail mixture. The smallholder, also needs spraying tanks, trained labour and finances to buy foliar sprays, etc. There seems no alternative but for the factories that process green leaf to take a role in providing these requirements to the tea grower. They will be amply compensated by better crops and good quality green leaf.
Rohana Illangaratne, chairman of a smallholders' association, has clearly demonstrated to the sector that if the proper man is in place the results can be obtained. He has been responsible for organizing the smallholders into active small groups. They are conscious of the need to supply good leaf. Mr. Illangaratne must now look towards methods of increasing low grown production. A comprehensive package to popularise foliar sprays seems to be one way of immediately boosting crop intakes.
By our Plantations
Correspondent
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