CSE News Updates

Market’s value swells by Rs. 43 b; improved sentiments trigger fresh round of buying; SEC gives more time for settlement of remainder of debt

Vesak illumination was literally in full glow yesterday for the Colombo bourse as its value rose by a whopping Rs. 43 billion, aided by positive news which triggered a fresh round of buying.
The stock market began after two days of Vesak holidays on a high note with indices up but as speculated exclusively by the Daily FT, announcement of relaxation of credit rules by the Securities and Exchange (SEC) saw the market boom.

The All Share Price Index finished the day up 1.75% to close at 7,487 points, highest since 19 April. The 129 point gain is also highest since 12 April. Milanka gained by over 1% or 81 points. Market capitalisation rose by Rs. 43 billion to Rs. 2,537 billion, short by only Rs. 63 billion from its all-time high of Rs. 2,600 billion on 14 February.

With yesterday’s gain, the Colombo’s year-to-date return rose to 12.84%, further cementing its position as Asia’s best performer. However, the MPI continues with negative return of 2.3%, although much lower in comparison to 4% as of last week.
Turnover topped the Rs. 3 billion mark, a two-week high; much of it came after the SEC’s announcement.
Via a directive SEC said brokers have been granted additional time to clear debtor balances. Accordingly, 25% of the remaining debtors over T+3 is are to be cleared by 30 September 2011 and the balance 25% to be cleared by 31st December 2011. Earlier the rule was to clear the remainder 50% of the debtor balance by 30 June.


“The commission decision to grant the relief as mentioned above was based on the improved market conditions, especially having taken cognisance of the fact that the majority of the stock broking companies have been able to reduce the risk exposure of debtors over T+3 days by 50% as at 31 March 2011 and representations made by market participants,” a statement issued by SEC Director General Malik Cader said.

The Daily FT yesterday reported the impending announcement whilst on 9 May it reported the broker recommendations of a deferment and a phased-out period of settlement.
“Relaxation of the credit clearance policy led to renewed buying interest across the board, resulting in both indices enjoying hefty gains,” John Keells Stock Brokers said.
‘Relief granted to clear debtors driving prices up,’ NDB Stockbrokers headlined its report. “Market recorded the second-highest daily turnover for the month. Most shares gained as buying interest improved,” the broker said.

“While improvements in quarterly corporate earnings failed to improve prices since last week, the extended deadlines on debt collections for broking houses seem to have elated the investors,” NDB Stockbrokers said.
In its usual style, premier blue chip JKH was the top turnover contributor for the day with Rs. 242 million via trade of 0.8 million shares. Its share price gained by near 1% or Rs. 2.90, to close at Rs. 299.

The Bank, Finance & Insurance sector was the main contributor to the market turnover (driven by HNB and Nation Lanka Finance), while the sector index increased 1.4%. Two crossings of 1,000,000 shares were recorded for HNB at Rs. 230. The Manufacturing sector also contributed significantly to the market turnover, with the sector index climbing 2.99%.
Central Finance gained by Rs. 26.70 to Rs. 1,600.40 and accounted for fourth largest turnover of Rs. 184 million, whilst HDFC Bank gained by Rs. 7.70 to Rs. 1,607.70. Biggies in the sector Commercial, DFCC and Sampath also gained, whilst Aviva NDB rose by Rs. 19.90 to Rs. 310 on a volume of 200 shares.

Softlogic Holdings Group’s Asiri Hospitals saw 20.15 million of its shares or 2.2% traded for Rs. 171 million, accounting for fifth highest turnover and the share price up 50 cents to Rs. 8.60. Related party Asiri Central on a thin volume of 700 shares gained by Rs. 12.30 to Rs. 312.30.
Another encouraging factor was continuing net foreign inflow with yesterday’s figure amounting to Rs. 74 million on top of Rs. 3.1 billion (in May) as of Monday.

source - www.ft.lk