DNH Financial (Pvt) Ltd.

Daily
15th 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) 15.09.2011 6,851 6,178 1.4 107.8 154.9 228 18.6 2,458 22.2 1.5 2.3 14.09.2011 6,896 6,228 1.6 62.2 115.4 232 18.8 2,474 22.3 1.5 2.4 %Chg. -0.6 -0.8 -14.7 73.4 34.3 -1.7 -1.1 -0.6 -0.6 0.0 -4.2

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Market Indices
7,200 7,000 6,800 6,600 6,400 6,200 6,000 9/9/2011 12/9/2011 13/9/2011 14/9/2011 15/9/2011

ASI MPI

Market Outlook
It was dj vu for equities with the ASPI losing 0.6% to close the session at 6851 while the more liquid MPI also lost 0.8% to end lower at 6178. Market turnover remained weak in the absence of any significant trades. Losers once again beat winners with Samson International, HVA Foods and Udapussellawa plantations declining by 9.7%, 9.6% and 9.3% offsetting gains in Associated Motor Finance, Regnis (Lanka) and Hapugastenna Plantations which rose by 20.4%, 10.2% and 10.0% respectively. In global markets, US futures opened higher after German and French leaders stated that they were convinced Greece will remain in the euro zone and that Greek budget cuts will restore stability to markets. Meanwhile, European and Asian markets also traded higher notwithstanding an announcement by Swiss banking giant UBS that it incurred a US$2 bn unauthorized trading loss at its investment banking unit which could result in the bank's 3Q2011 performance heading into the red. In the absence of any negative economic or corporate news, we view the current decline in the ASPI as highly unjustified and only temporary. Although investor sentiment may have been temporarily dampened by the lull, we continue to advise investors to use the price weakness as an opportunity to accumulate quality positions. Consequently, we re-iterate the need for investors to take a directional call, make an informed investment decision, build a robust portfolio and maintain a strict investment discipline over a reasonable investment horizon in order to benefit fully from the markets break to the upside that we believe will occur sooner than later. Our advise to investors is to, Avoid trading on media headlines Select investments carefully, investment, not speculation, conscious of market dynamics

Carefully observe liquidity flows between sectors & stocks as they can be an excellent indicator of market direction Diversify risk in a focused and informed manner Focus on a companys future earnings; the past is only a guide Select the right stocks, back them for the medium to longer term, and the market should take care of itself

Gainers /Losers (%)

Gestetner Udapussellawa Plantations HVA Foods Samson International Muller & Phipps Hapugastenna Plantations Regnis (Lanka) Associated Motor Finance

-9.2 -9.3 -9.6 -9.7 9.4 10.0 10.2 20.4

Significant Trades (Turnover in LKR Mn)

120 100 80 60 40 20 0 BLUE BLUE (X) CLND GUAR

focusing on while being

Global Markets
Sri Lanka - ASPI India - Sensex Pakistan - KSE 100 Taiwan Weighted Singapore - Straits Times Hong Kong - Hang Seng Index 6851 16877 11302 7386 2766 19182 %Chg. -0.65 1.00 0.05 2.17 0.97 0.71

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 15.09.2011 9.5% 6.4% 7.3% 6.3% 110.9 153.1

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.