|
|
 |
 |
| Sunday, 9 November 2003 |
 |
|
 |
Business |  |
| News Business Features Editorial
|
Stocks recover: highest gain in a single day by SUREKHA GALAGODA, PELHAM JURIANSZ & HIRAN H. SENEWIRATNE Colombo's stock market recovered strongly by the end of last week with a record single day's gain, taking even analysts by surprise. Going on this remarkable expansion, analysts predict that the CSE, the world's second best performing emerging market, will remain stable as long as there is no war in the country. A Sunday Observer survey found that most analysts feel that political events would not seriously affect markets in the long term since the current situation can be sorted out with the two major parties ironing put their differences. The present scenario is not a no-hope situation as foreign investors were net buyers with purchases of Rs 685.4 million while they sold shares worth only Rs 166.1 million during the week. Bargain hunters too picked up stocks at cheap prices during the week. During the week, the Milanka Price Index decreased by 8.6 per cent and the All Share Price Index (ASPI) by 8.3 per cent. Ceo of HNB Stock Brokers and President Stock Brokers Association Deva Ellepola said: "The two parties should come together as cohabitation is the key. Both parties should work out the differences as this is the way forward." The market looks good at present and fiscal discipline will not be affected in the short term if peace is not affected. Foreign investors are responding positively, the fundamentals are still in place and the medium-term view is positive, but if further negative news such as an election or a war is announced, there would be pressure on the ASPI. "The present stability in the economy did not happen overnight; all who were responsible had to put in a lot of hard work to stabilise the currency, reduce interest rates, increase tourist arrivals, sign a ceasefire agreement between the LTTE and the Government, increase employment and attract foreign investment into the country. Are we going to throw it out of the window and get back to square one? No one would want that to happen. Therefore, the best solution is for the two parties to come together and iron out their differences," he added. Director and CEO, MMBL Philip Securities Ltd, Dimuthu Abeysekera said: "As long as there is no war in the country, the stock market will do well though the market slowed down temporarily during the last few days." The leaders of the two main political parties should learn to cohabit and iron out their differences because the country and its people should come first. Therefore, the two main political parties will have to look beyond personal interests and work for the common good as the sooner we iron out our differences, the better off we will be as a country. "We, as a country, have been resilient and in my view, this is only a temporary slow-down. Once the differences are ironed out, the market will bounce back. Foreigners are still net buyers, which shows that they still have confidence in our market," added Abeysekera. Executive Director, Lanka Orix Securities, Rohan Seneviratne said: "There are opportunities for retail investors to make money while there is value in the market for long-term investors as well. Therefore, it is not a no hope situation." He said: "The market is presently fluctuating because politics play a major role in the shaping of the financial market in Sri Lanka. Therefore, when there is positive news, the market indices pick up while it drops when there are negative sentiments. Once the differences are ironed out between the two political parties, the stock market will regain its momentum. I think it is a cyclical scenario. "Look at value companies with potential earnings growth and a below net asset value and purchase those shares." Asanga Seneviratne, Managing Director of Asia Capital, commenting on the decline in the ASPI said that it is unfortunate what has happened during the last few days as "if we reflect back on the past 20 months or so, we have had relative peace and the economic climate was good". "Earlier we had a bull run at the Colombo Stock Exchange (CSE) and there was successful trading, resulting in the ASPI improving," he added. "I predicted at the time (about two to three months back) that although the CSE was doing well and there seemed to be an upward trend, that we should not be complacent. I made a comment that the system was not user- friendly and therefore was a failure as it is too cumbersome. By cumbersome, I meant that there were too many legal documents to be completed and from anywhere else in the world, you can sell and buy shares without actually physically having it. Short selling methods had to be developed." "The ASPI was doing well because of the positive signs of the peace process. As I saw it at the time, the only detriment could be the falling-out between the President and the Prime Minister. Well, my prediction has been proved right. "What has happened is very unfortunate, though constitutionally, the President has all the rights to do what she has done. The situation at the CSE on Thursday was very much better and trading has gone on with the two major players John Keells and Sri Lanka Telecom being involved. Hopefully, things should be better in a couple of days," an optimistic Seneviratne said. Research Analyst, CT Smith Stockbrokers (Pvt) Ltd, Eranjan Kulathunga said the present political crisis has adversely affected the market. He said the only alternative is for both political parties to enter a reconciliation for things to go smooth and to expect any improvement in the current market scenario. ########### ASPI jumps 12.3% The ASPI, which went down by nearly 18 per cent during the week, recovered on Friday, moving up 142.3 points, recording its highest ever point gain for a given day, the CSE said in a news release. It surpassed the 107.5 gain recorded on December 7, 2001. The Milanka also moved up by 276.7 points, the highest point gain for a day for the index. It had increased by 235.2 points in December 7, 2001. The 12.3 per cent gain of the ASPI was its second largest percentage gain within a day after the December 7, 2001 gain of 20.1 per cent. It closed on Friday at 1298.4 points while the Milanka closed at 2361.6 points. A total turnover of Rs 984.9 million was recorded on the day. Foreign investors continued to be net buyers in the market with purchases of Rs 94.6 million and sales of Rs 52.1 million. Market Capitalisation moved up by Rs 37.9 billion from the previous day's Rs 281.9 billion to Rs 319.8 billion. |
|
News | Business | Features
| Editorial | Security Produced by Lake House |
