Analysts expect a market correction in the coming weeks after the galloping Colombo bourse hit an all time high on Friday. Analysts expect a market correction in the coming weeks after the galloping Colombo bourse hit an all time high on Friday.
The rally was sustained by medium capitalized stocks that were snatched up by retail investors.
However, they stayed away from significantly driving up prices of small banks that are likely to struggle to meet Central Bank’s new minimum capital requirements.
Small cap bank Nations Trust was up Rs. 1.25 to close Rs. 25.25 while PABC was up 50 cents on Friday to 28.50.
Analysts say investors are fighting shy of investing in small cap banks like NTB and PABC because of new Central Bank rules that require these commercial banks to increase capital five fold in the next two years.
Asia Capital in a recent equity report however said higher capital would create a resilient banking system.
Established commercial banks like HNB, Commercial Bank, Sampath and Seylan already have the required two and a half billion in minimum capital.
Asia Capital however says