CSE on growth trajectory

By Lalin Fernandopulle

Stock market analysts said that the performance of the All Share Price Index (ASPI) of the Colombo Stock Exchange (CSE) on July 8 was remarkable and added that the index is on a solid growth trajectory.

Analysts said that the ASPI's feat is an indication of the confidence placed by investors on the CSE which would help boost capital market growth.

Senior Banker and capital Market analyst, Mangala Boyagoda said that with the drop in interest rates and inflation there is a good environment for investments.

Sri Lanka has good stocks for long-term investments compared to other markets in the region and added that investors are moving to the equity market. Foreign strategic investors are coming to Sri Lanka. The growth momentum will continue during the rest of the year. Corporate performance along with a vibrant services sector is vital to boost capital market growth. CSE Head of Market Development, Niroshan Wijesundara said that the performance of the ASPI was outstanding and added that the upward trend will continue through the rest of the year.

“Considering the economic growth rate, low inflation and interest rates there will be an upward trend in the stock market,” Wijesundara said. HNB Stock Brokers (Pvt) Ltd. General Manager and CEO Deva Ellepola said that most banks had provided adequately for gold loans which affected banking sector stocks.

This will not be the case in the third and fourth quarters this year. He said that loan growth in the banking sector in the second half will help boost stocks.

According to a rating agency, earnings of the banking sector will not be encouraging. Stocks from construction sector companies will receive a boost due to the rapid infrastructure development in the country. The main index of the Colombo Stock Exchange, the All Share Price Index(ASPI) crossed the 6,500 point mark, at the close of trading on July 8 for the first time since October 2011.

The ASPI recorded 6,565.81 points whereas on October 14, 2011 it was 6,549.91 points. The index appreciated 11 percent from January to July 8 this year.

The S and P Sri Lanka 20 which covers the largest and most liquid stocks from the equity market appreciated 12.6 percent.

The ASPI is on a growth trajectory compared to the 4.8 percent recorded last year and a negative 7.1 percent in 2012. Retail investors who accounted for around 35.5 percent of the total market in 2013 have increased to 37.6 percent. Sri Lanka’s stock market was ranked the second best performing market with the ASPI crossing the 7,000 mark in 2011.

Securities Exchange Commision Chairman Dr. Nalaka Godhewa said that the Sri Lanka should move beyond being a frontier market to an emerging market status which will help boost investor confidence.