UPFA victory boosts investor confidence

Political stability in the country ensured by the overwhelming victory of the UPFA at the general election boosted investor confidence and it was reflected in the boom in the Colombo Stock Exchange last week.

The positive momentum of the stock market started on Monday continued throughout the week and All Share Price Index (ASPI) and Milanka price indices and turnover recorded a continuous growth.

This performance was recorded despite most investors keeping away from the market as most of the companies were closed due to New Year holiday. Analysts expect the momentum to continue in the next week after businesses returns to normalcy.

The market ended for the week with a total turnover of Rs.1.78 billion, low compared to Rs. 2.3 billion recorded on Thursday. The ASPI on Friday closed at 4,121.64 up 1.08 percent (44.09 points) while the Blue Chip Milanka closed at 4,695.83 by 41% (19.05 points).

Economic analysts said that the stock market performance demonstrated the long-run prospect of economic growth in the country. Today the investors have received what they requested during the last 30 years, that is security and political stability.

The cooperation demonstrated by the ruling party and the opposition at the inaugural Parliamentary session last Thursday will further strengthen investor confidence, analysts said.

The CSE made many records since May last year, after the end of the conflict.

Again on November 20 the CSE, surpassed the highest ever turnover when it reached Rs. 115.2 billion for the year 2009 to date. The previous record was Rs. 114.6 billion in 2005.

On December 21 both indices ASPI and MPI created new records. The ASPI reached 3,219.87 up by 0.97% and MPI reached 3,666.45 up by 0.91%.

Analysts said that these achievements indicate that peace and political stability achieved is being translated into optimism in business prospects. The end of the conflict means the risk for investments has been reduced, new opportunities and new markets have been created in the North and the East.

Rehabilitation and reconstruction have created major investment opportunities. A market for consumer goods and other durables as well as markets for vast amount of natural resources, raw materials, and agricultural products have been opened.

Analysts said that policy supports from the government is also a major factor for the stock market boom. IMF standby agreement facility removed external uncertainty over the Sri Lankan economy. Stability of the Rupee, lose monitory policy and lowering of interest rate, sharp decline in inflation and lower unemployment rate helped build confidence on the macro economic stability of Sri Lanka. It boosted business confidence, analysts said. (GW)