Sunday Observer Online
 

Home

Sunday, 22 August 2010

Untitled-1

observer
 ONLINE


OTHER PUBLICATIONS


OTHER LINKS

Marriage Proposals
Classified
Government Gazette

Stock Exchange’s Price bands foil capital market bubble

The Securities and Exchange Commission of Sri Lanka (SEC) will review price curbs imposed on sto ck prices of the Colombo Stock Market (CSE), said a SEC source on Tuesday.

He said the SEC will consider whether the price bands could be applied to the entire market or introduce multiple bands in stock prices. “The SEC had to impose the price bands on stock prices to avert a capital market bubble that would have eventually led to economic mayhem in the country”, he said.

A reader’s observation ...

MARKET ON A BULL RUN DESPITE HINDRANCES!! However, as the controversy rages about the recent 10 per cent rules and the suspension of certain companies, all those concerned, even the stock brokers have forgotten about the absurd DAY ORDERS ONLY rule.

This is in place of the GTC orders i.e. five days orders. Now this creates five times of the workload for the Stock Exchange and the brokers. To make it clearer still when a client gives a GTC order it lasts five days. But now under this rule, an order has to be keyed in five days instead of in one day.

Now why is the CSE trying to increase its workload? Is it to harass the investing public?

Trading in progress at the Colombo Stock Exchange

Share prices surged far beyond the real value following bullish trading at the CSE, a phenomenon observed in recent months. The price restrictions led to a crisis in the CSE followed by protests from brokers and capital market participants.

Director Financial Service Academy, SEC, Dr. Dissa Bandara said the price curbs were criticised due to lack of awareness among stock brokers and investors.

“The price caps imposed by the SEC on share prices have served the purpose and market participants will understand that unnecessary anticipation has no value”, he said.

Dr. Bandara said the intervention by the SEC was timely as it helped avert a major catastrophe in the capital market which would have led to an economic crisis.

“The price bands will help streamline trading at the CSE and place the share market on a solid growth path. The CSE recorded an all-time high on Tuesday”, he said. The All Share Price Index was up 114.50 points (2.21%) against a 15.09 points gained by the Milanka with 103 gainers outpacing 70 losers.

“The growth of the Sri Lankan capital market has been hampered due to the slow response rate among investors.Investors need to be trained to make informed decisions”, Dr. Bandara said.

Capital Market analysts said the share prices shot up to unprecedented levels due to either manipulation or unnecessary speculation.

Senior banker and capital market analyst Mangala Boyagoda said there should be measures in the CSE to penalise those who take undue advantage but it should not be to penalise the entire market.

“CSE should encourage more companies to list in the stock exchange and ensure that they follow regulations”, he said.

Rakshitha Perera of Bartleet Stock Brokers Ltd. said while the price curbs limited the upside potential of the market it also helps investors to pause and check the fundamentals before buying stocks. Investors should buy stocks based on the value of the company. They should look into the speculative counters and inquire. “Could prices surge without an increase in the company’s earnings”. SEC sources said that market manipulation is an offence and added that steps will be taken to trace such attempts and penalise offenders. The prime objectives of the SEC are to maintain an orderly and fair capital market and to protect investors.The share market operates based on the sentiments of the investors.

EMAIL |   PRINTABLE VIEW | FEEDBACK

www.lanka.info
www.army.lk
www.news.lk
www.defence.lk
Donate Now | defence.lk
www.apiwenuwenapi.co.uk
LANKAPUVATH - National News Agency of Sri Lanka
Telecommunications Regulatory Commission of Sri Lanka (TRCSL)
www.peaceinsrilanka.org
 

| News | Editorial | Finance | Features | Political | Security | Sports | Spectrum | Montage | Impact | World | Magazine | Junior | Obituaries |

 
 

Produced by Lake House Copyright © 2010 The Associated Newspapers of Ceylon Ltd.

Comments and suggestions to : Web Editor