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| Sunday, 15 December 2002 |
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Business |  |
| News Business Features Editorial
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"SLT stock can double value within an year" The Sri Lanka Telecom (SLT) Initial Public Offering (IPO) has done well to be oversubscribed in a subdued market environment in general and a sluggish telecom sector worldwide in particular. When the markets turn and investors realise the opportunities for cost management and volume expansion in the North-East, the SLT stock has the potential to double its value within 12 months, said Dr Shantha Yahanpath, Director Agape International, a Sydney-based fund management company. Had the issue been marketed well, he said, it would have attracted more retail, institutional and foreign investors. In Dr Yahanpath's view "Sri Lankan fund managers are not mature enough to advise investors on making prudent choices". Retail investors and overseas players have secured over two billion rupees worth of stock while the rest has been taken by institutional investors. To minimise the risk with big issues like this, institutional investors should keep the exposure to such stocks close to the index. Two other options are, to reweight the portfolio at a higher price; or let the portfolios under-perform in the hope that the stock will become cheap. However, both options are costly, he said. "If people want to be prudent investors, they should buy at least at the time it is listed on the Colombo Stock Exchange". Conventional wisdom and investment theory tell us that large IPOs with significant weighting in a large cap index should not be under-weighted in our portfolios. This is fundamental in managing the risk of under-performance, Yahanpath said. |
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