Bourse ends at 3-year high on financials amid speculative trading
Friday, 22 August 2014 00:01
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Reuters: Stocks hovered around three-year highs on Thursday, led by financials due to lower interest rates, but analysts said increasing speculative trading in fundamentally weak shares could impede the healthy growth the index has had this year.
The main stock index ended up 0.07%, or 4.78 points, at 7,004.75, its highest close since 18 August 2011. The index has gained 18.4% so far this year.
“Shares with weak fundamentals are also moving up from this week. If this set of stocks gathers momentum, it could be attractive for retail investors,” Babushka Samarasinghe, the COO at Softlogic Stockbrokers, told Reuters.
“It could sharply increase the market risk as in the past,” he said, referring to the index plummeting more than 20% after it hit a record peak in February 2011.
Shares of investment firm and broker Taprobane Holdings jumped 66.7% to Rs. 4.50 in heavy volume which stockbrokers cited as a speculative move, while market heavyweight John Keells Holdings gained 1.51% to Rs. 248.70.
Thursday’s turnover was Rs. 1.47 billion ($ 11.3 million), higher than this year’s daily average of Rs. 1.19 rupees.
The Bourse saw net foreign inflows of Rs. 88.1 million on Thursday, extending the year-to-date inflows to Rs. 7.57 billion.
ASPI crosses 7,000 mark
The Colombo Stock Exchange’s (CSE) All Share Price Index (ASPI) crossed the 7,000 mark yesterday, closing at 7,004.75 points. This is the first instance after three years the ASPI crossed 7,000 points since closing on 7,030.85 points on 18 August 2011.
The CSE has crossed a number of performance milestones during 2014, with the ASPI and the S&P SL20 Index achieving three-year highs, the organisation said in a statement. The market also closed on a high turnover value on 19 August of Rs. 8.2 billion, the highest since a turnover value of Rs. 15.7 billion recorded on 16 March 2012.
“The Colombo Bourse is also performing exceptionally well in comparison to regional markets, being within the top six best performing markets in the region, with the ASPI showing a year-to-date growth of 18.46%,” the statement said.
Within the course of 2014, there have been five equity IPOs, an equity introduction and five debt IPOs. The capital raised through equity IPOs has been the highest since 2011, with Rs. 2,693.8 m, being raised in the first eight months of this year and the market has seen a total of Rs. 12 b of debt and equity capital raised through primary and secondary offerings.
“Investor confidence and sentiment in the capital market has also improved in the past year due to market development and market regulatory activities, supported by a low interest rate regime making the capital market a more attractive investment opportunity.”
Local retail investor participation in the market has grown to 37.9% from 33.5% in 2013 while foreigners remained net buyers during 2014 with a net foreign inflow of Rs. 8 b.
Rupee ends steady; seen stable on CB intervention
Reuters: The rupee closed steady on Thursday, as exporter dollar sales were offset by greenback buying from a State bank, while dealers expect the currency to be stable throughout the year after the Central Bank Governor’s comments.
The rupee ended at 130.19/22 per dollar, little changed from the Wednesday’s close of 130.19/22.
“The appreciation trend is intact, though we expect the rupee to be stable with the Central Bank intervening,” a currency dealer said on condition of anonymity.
Central Bank Governor Ajith Nivard Cabraal in a foreign correspondents’ forum late on Wednesday said the bank would intervene in the market for stability of the rupee.
“It’s a thin market. We intervene because we don’t want the market to get disturbed with a single transaction whether it’s an inflow or outflow.”
Dealers said one of the two State banks, through which the Central Bank usually intervenes in the market, bought dollars at 130.20 per dollar and were not sure if they were buying on behalf of the Central Bank.
The Central Bank has absorbed $ 1.09 billion from the market through Wednesday, a Central Bank official said, to keep the rupee steady and prevent sharp appreciation as well as excess volatility in the rupee.
