MBSL Midcap indices cross 4700 mark

MBSL Midcap indices which capture the price movement of the medium capitalised companies in the Colombo bourse crossed the milestone of 4700 points last month recording a superior rate of return of 43% (unannualised) for the first eleven months of 2006.

The Midcap index and MBSL MIDTRI which were launched in 1999 and 2004, by the Merchant Bank of Sri Lanka (MBSL) as an enhanced strategy to measure the performance of the medium capitalised stocks in the market and a vehicle for an equity indexing strategy.

It was a much needed move to fill the vacuum by introducing an index to capture the performance of the medium capitalised companies since the performance of ASPI and MPI is associated with the "large-cap bias", which means the domination in the indices by the large capitalised companies.

The filtering criteria of 25 stocks in the index are the market capitalisation (in the range of Rs. 550 million - Rs. 5.5 billion), liquidity and profitability.

Both the indices are spread over eight different sectors, representing Banks and Finance, Manufacturing, Health care and Hotels sectors. Therefore, the Midcap index ensures a satisfactory diversification across sectors.

The Midcap had a market capitalisation of Rs. 67 billion as at the end of last month accounting to about 8% of the total market capitalisation of the Colombo bourse.