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Sun, 31 August 2014 03:29:42
Sri Lanka stocks plunge, rates up
24 Nov, 2011 15:45:29
Nov 24, 2011 (LBO) - Sri Lankan shares tumbled Thursday, crashing below the 6,000 point mark amid uncertainty among investors about government policy after takeover of businesses and a snap devaluation of the rupee.
The main All Share Price Index fell 2.79 percent (168.61 points) to 5,886.75, while the more liquid Milanka index fell 2.46 percent (129.92 points) to close at 5,145.49, according to stock exchange figures.

Turnover was 1.6 billion rupees.

Brokers said the market plunged in the morning after a brief opening rally.

"There was a bloodbath today as the Index broke the key technical support level of 6,000," Bartleet Religare Securities said.

"There were 225 losers to 13 gainers as all stocks were sold down with increased volume. The index will now trade in its new range of 6,000 to 5,800."

The brokers said the steep fall in the main index came despite a stable John Keells Holdings which has the biggest market cap with 6.73 percent and People's Leasing Co. (1.28 percent) which showed little downside movement.

SC Securities said investors were "pushing the panic button."

People's Leasing Company, which began trading Thursday, was the most actively traded stock, with 4.3 million shares traded.

It closed 10 cents below its IPO price, at 17.90 rupees, according to the volume weighted average price on the bourse.

PLC went up to 18.30 during the day and a low of 17 rupees.

Transactions in John Keells Holdings accounted for the days biggest turnover with the stock closing flat at 175 rupees and over 3.3 million shares traded, including two crossings of off-market private deals each of 500,000 shares at 175 rupees a share.

Several warrants of Environmental Resources Investments were among the biggest losers of the day.

ERI's W0003 warrants closed at 13 rupees, down 2.70, W0006 ended at 13.10, down 2.50 and W0002 closed at 13 rupes, down 2.30.

Almost plantations companies traded Thursday fell, except one.

Balangoda Plantations closed at 27 rupees, down 4.50, with 131,300 shares traded.

HVA Foods, the second most actively traded share, closed at 32.70 rupees, down 4.30 with 1.26 million shares changing hands.

The government said it will go ahead with expropriation of 37 businesses deemed under-performing under a controversial new law that has been opposed by the private sector and which rating agencies have warned could deter investors.

Cabinet spokesman minister Keheliya Rambukwelle said the competent authorities have appointed with immediate effect to handle the 37 enterprises that have been taken over by the state.

Meanwhile, interest rates in overnight markets for gilt backed repos hit 8.00 percent and call rates hit a two year high of 9.25 percent and forward dollar rates also rose, dealers said.

Bartleet Religare Securities said the lack of money in the system is a "big threat going forward" and could push the index down further.

" . . . easing of credit conditions can inject a much needed boost for markets," they said.

"In the Government securities auction yesterday, we saw a notable rise in the bill and bond rates which is an indication of rates going forward. We feel that we may see a rise in the risk free rates and hence borrowing costs."

Correction: price of People's Leasing Co.

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READER COMMENT(S)
6. Bun Key Choon Nov 25
Why the huge interest in HVA foods is possibly something the SEC needs to look into.
5. "A" Retailer Nov 25
Regulators countinously said they were imposing various laws to safeguard retailers in the market. If anyonne tries to analyse what is happening now, it's the retailers who are mostly affected at this moment. they get thrown out from the market and some may not be able to recover for ever. Market is down by almost closer to 2,000 points from where it was few months back.

What have these so called regulators done to avoid such a disaster. But when the market was rising we have seen them boasting every where saying this is one of the best share markets in the world and so on. Today we don't see even the government is trying to take any corrective action.

They too keep quiete because they know very well the big players in the market are not affected. I assume the big players who have made enough money from the market must be laughing at the retailers and keep on collecting shares at very low prices even now. I cannot understand the aim of SEC who are conducting various programs all over the country to attract retailers to this market.

Finally thank you to all the officials and some of the economists who have contributed immensly to change the situation.

4. adam Nov 25
Another busted IPO, arrangers(NDB and Capital Alliance) are not leaving enough money on the table for investors and looking after company interest only...
3. Appuhamy Nov 25
No point throwing tax holidays and various other incentives to investors. What is important is to build trust and confidence with consistence policy making. SL should not be seen as a family business. Learn good things from Malaysia and Vietnam and apply in SL.
2. Manjeeva Nov 24
USA etc. markets have also gone down around 2%. Do Americans protest against the drop? Do they blame the SEC?
No
1. Niro Nov 24
Its time for buyer of last resort (i.e. EPF) to step in ... otherwise we'll see protestors infront of CSE soon !