Trillion triumph for CSE

by Lalin FERNANDOPULLE

Regained investor confidence along with falling inflation and bank interest rates spurred the Colombo Stock Market to the rank of the best performing market in the world.

Market capitalization topped the Rs. 1000 billion mark (1 trillion) on Tuesday recording the highest in the Stock Market history enticing more foreign investors.

The All Share Price Index (ASPI) gained an all time high record of 3,098.2, a growth of 106.1 percent todate while the Blue Chip Milanka Price Index closed at 3.508.7, a growth of 115.1 percent todate.

Director General, Securities and Exchange Commission (SEC), Channa De Silva said investors have re-rated the Colombo Stock Market and as a result the market has been elevated to a high Price Earning Ratio (PER).PER increased to 14 percent from around six to seven percent.

De Silva said the Commission has been vested with more powers following the amendment to the SEC Act. The issuing of directives to listed companies and regulating the derivatives market will be under the purview of the SEC.

The CSE recorded a year-todate Net Foreign Purchases of Rs. 6000 million. The CSE expects a greater degree of foreign participation in the market next year.

The CSE plans to set up branches in the North and the East shortly. The next road show of the CSE will be held in Singapore on November 26.

Manager Business Development CSE, Thushara Jayaratne said the ASPI shot up to 1,192 points, a 62 percent after the war while daily transactions rose to 5,100 per day from 2,700 a day during the period of the war.

“Turn over of the CSE branches at Matara, Kurunegala, Kandy and Negombo has increased”, he said.

Central Bank Governor Ajith Nivard Cabraal said the CSE will achieve records daily due to the highly favourable business environment in the country.

“The country has achieved a milestone but everyone should put his best foot forward to sustain the momentum” Cabraal said.

The Governor was optimistic of the future of the stock market due to the continuous flow of foreign investment to the country.

Stock market analysts attributed the growth to the peaceful environment prevailing the country which is conducive for the sustenance of businesses.

The rise in market capitalization in a stock market implies a favourable climate for development in a country.

COO, Acuity Stock Brokers Pvt) Ltd., Prashan Fernando said the local retail investing has increased because of low interest rates for Treasury Bills.Foreign activity is lukewarm with more selling.

“The market will be on an upward trend if corporates consolidate their growth”, he said.

Ceybank unit Trust, the largest Unit Trust Fund achieved another milestone with net assets exceeding Rs. 3,000 million on October 5 recording 82 percent growth for the year.

Chairman, Unit Trust Management Co(Pvt) Ltd. (UTMCL), Siromi Wickremasinghe said the company was able to achieve this feat due to growth oriented investment taken by fund managers.

CEO/Executive Director, UTMCL, Chitra Sathkumara said the post war rally in the stock market is one of the strongest in Asia.

No other market in Asia has seen such a strong reversal in sentiment and turnover has risen sharply due to more participation of local retail and high networth individuals and FDIs.

“Although the current top down view looks worrisome from a valuation perspective, we do not think that this rally has run its full course though interim pull backs could not be eliminated”, he said.

UTMCL will remain overweight because liquidity is yet ample and investor confidence is growing due to expectations of past war improvements to the economic and political conditions in the country.

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CSE timeline

January 22

CSE was named as the best performing market globally for the year 2009. The main price index of the CSE has recorded exceptional gains during the first month of trading in the year 2009.

The All Share Price Index (ASPI) recorded a growth of 16.3% for the year on the day, making the Colombo Stock Market Index the best performing index globally. The Milanka Price Index (MPI) too recorded a year-to-date growth of 16.6% on 22nd January 2009.

May 18

The main price indices of the CSE recorded exceptional gains during trading on 18 May 2009. ASPI gained 123.2 points (6.5%) to close the day at 2,030.9 while the 25 stock MPI recorded an increase of 162.0 points (7.8%) during the day’s trading to close at 2,230.2.

June 18

The Colombo Stock Exchange created history again by recording the highest number of transactions for a trading day. A total of 15,290 trades were executed on the day, surpassing the previous record of 13,254 trades on 28th July 2005. The turnover for the day was Rs. 2.0 billion.

July 15

The Colombo Stock Exchange re-opened the Trading Floor at the World Trade Center on Thursday, 23 July 2009. The CSE temporarily suspended operations of the Public Gallery/Trading Floor at the World Trade Center in April 2008 due to security concerns.

September 09

ASPI created history when the index closed at 2,779.8.

This is the highest point reached by the CSE index since May 2007, making today’s index close a 28-month high.

The highest ever point reached by the ASPI was 3,016.4 on 16th February 2007. MPI closed at 3,127.6 today.

September 17

The CSE created history again by recording the highest ever market capitalization (the total value of the CSE) of Rs. 942.6 billion. The previous record was Rs. 938.6 billion, recorded on 13th February 2007.

Market capitalization represents the aggregate value of a company or stock.

It is obtained by multiplying the number of shares issued by their current price per share.

The total market capitalization of the CSE is an aggregation of the market capitalizations of all listed companies.

October 05

Reuters announced that the Colombo Stock Market is the best performing stock market in the world for the year to date. The ASPI broke further records when the index closed at 3,098.2 the highest point.

The growth of the index for the year to date reached 106.1 % at market close.

The MPI closed at 3,508.7, recording an year to date growth of 115.1%. The market capitalization of the CSE as at the end of trading was Rs. 994.5 billion, the highest recorded in CSE history.

October 06

The market capitalization of the CSE crossed Rs. 1 Trillion mark.