Stocks dive as world markets slide
By Dinali Goonewardene
As stock markets the world over strongly slid downwards on fears of slowing economic growth, foreigners took their money out of the Colombo stock market yesterday, contributing to a seven-week low.
Foreign sales were Rs. 70 million and net foreign outflows Rs. 21.8 million, albeit a relatively low component of total turnover. Reuters reported that thus far in 2011, offshore investors have sold Rs. 16.6 billion after a record Rs. 26.4 billion in 2010.
It added that the market closed at its lowest since 28 July but managed to hang onto its position as Asia’s best performer with a return of 1.49 per cent on the year.
The International Monetary Fund in a recent release forecasted a dangerous phase for the global economy with slower growth of 4% in 2011. Growth in 2010 was 5%.
Europe is expected to slow with Italy expected to slow to 0.6% growth in 2011 from 1.3% in 2010. Japan too was in negative territory with growth for 2011 expected regress 0.5%.
The indices on the Colombo stock market fell with the All Share Price Index dropping 27.78 points (0.41%) and the Milanka Price Index falling 83.67 points (1.37%) on turnover of Rs. 1.1 b.
As blue chip counters fell and trading in illiquid stocks continued, the CEO of a broking firm said stocks appeared overvalued at the Price to Earnings multiple of 18-19 times.
Activity levels on the Colombo market had dropped turnover levels, which ranged around the Rs. 5 billion mark a year ago, and are now much lower.
The highest contributors to turnover yesterday were Regnis which saw 630,000 shares trade contributing Rs. 183 million to turnover, Renuka Holdings which saw 2.2 million shares trade contributing Rs. 144 million to turnover and Radiant Gems which contributed Rs. 72 million to turnover when 382,500 shares traded.
Renuka was up Rs. 3.50 to close at Rs. 64.20 and Radiant Gems closed up Rs. 8.90 at Rs. 192.50.
It was rumoured that Regnis shares were being picked up by a high net worth individual, although this remains a relatively illiquid counter with about 4.6 million shares in the free float. Regnis shares closed up Rs. 26.30 at Rs. 304.30. The CEO of a stock broking firm who preferred to remain anonymous said firms required to clear their debtors’ positions must have done so by now.
Reuters reported that the rupee closed flat at 110.29/110.30 a dollar amid importer dollar demand, with a State bank, through which the Central Bank directs the market, selling the greenback at a flat rate of 110.30, 109.70/110.20, dealers said.
The Central Bank mopped up Rs. 25 billion from the market through a repo auction at 7.08%.
source - www.ft.lk
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