Nov 28, Colombo: Sri Lankan President Mahinda Rajapaksa today emphasized the need for the country's stock market to attract local as well as foreign investors.
Addressing a meeting with the office bearers of the Brokers Association of the Colombo Stock Exchange held at Temple Trees this morning, the President pointed out that the present atmosphere with an economic growth of eight percent is the most suitable opportunity to attract investors.
During the meeting, the representatives of the Brokers Association acknowledged that the Colombo Stock Exchange (CSE) immensely benefited after defeat of terrorism, two years ago.
The brokers have met with the President, who as the Finance Minister has the authority to regulate the share market, to suggest measures to boost the slumping market and express their concerns over the tightening of regulations by the Securities and Exchanges Commission (SEC) which they say contribute to the declining bourse this year.
A broker who attended the meeting with the President has told Reuters that the meeting progressed well and it was positive.
The President has agreed to look into extending credit limits, removing price bands set in place to prevent manipulation, increasing bank lending limit to 7.5 percent from 5 percent, the brokers have said.
The Colombo bourse climbed over 4 percent from a 14-month low today following the President's meeting with the stock brokers, Reuters reported.
Minister of Economic Development, Basil Rajapaksa, Deputy Minister of Finance and Planning Gethanjana Gunawardena, Secretary to the President Lalith Weeratunga and the Secretary to the Ministry of Finance and Planning Dr. P.B Jayasundara participated in the discussions.
* Brokers' meeting with president successful -brokers
* The President agreed to ease worries over margin trading, credit and price band- brokers
* Rupee flat for 4th session; Cenbank sold $160 mln to defend rupee since devaluation- dealers
COLOMBO, Nov 28 (Reuters) - Sri Lanka's stock market
surged over 4 percent from a 14-month low on Monday after
President Mahinda Rajapaksa met the heads of stock brokerages to
hear their proposals to help boost a flagging market.
The island nation's main share index surged 4.14
percent in early trade but closed 3.73 percent or 216.48 points
up to 6,022.24, highest since Nov. 23.
The bourse hit a 14-month low on Friday as investors dumped
shares after a currency devaluation and foreign investors sold
their positions, amid a tightening credit crunch and margin
Brokers have been frustrated by increased regulation by the
Securities and Exchange Commission (SEC), including probes into
share price manipulation and tightened credit rules, which
brokers blame for this year's slumping bourse.
"The meeting with the president went well and it was really
positive," a stockbroker who attended the meeting told Reuters.
Three brokers Reuters spoke to said that Rajapaksa, who as
finance minister has oversight of market regulation, agreed to
look into extending credit limits, removing price bands set in
place to prevent manipulation, increasing bank lending limit to
7.5 percent from 5 percent.
"He agreed for most of the concerns, but I don't know how
long will it take for implementation," said another broker on
condition of anonymity.
The president's office in a statement did not mention any
agreements with brokers, but said the president pointed out the
need to attract both local and foreign investors into the
Shares in Hva Foods Ltd surged 26.71 percent to
40.80 rupees a share while Colombo Land and Development Company
PLC rose 18 percent to 53.70 rupees. These shares have
been investigated for market manipulation by the SEC.
Market heavyweight John Keells Holdings PLC ended
up 0.52 percent at 175 rupees.
The day's turnover was 1.23 billion Sri Lanka rupees ($10.84
million), highest since Nov. 18 but well below last year's
average of 2.4 billion and this year's 2.4 billion.
Total volume was 79.4 million shares, against a five-day
average of 70.7 million. The 30-day and 90-day average trading
volumes were 56.4 million and 100.9 million. Last year's daily
average was 67.9 million.
The bourse has fallen 11.2 percent since Oct. 1 and is
Asia's 11th-best performer with a year-to-date loss of 9.73
percent. It gave Asia's best returns in 2009 and 2010.
The bourse saw a net foreign outflow of 104 million rupees
on Monday, and thus far in 2011, offshore investors have sold
17.4 billion, and a record 26.4 billion in 2010.
On Monday, the bourse shot to the neutral territory from
oversold with the 14-day relative strength index at 39.4, above
the lower neutral range of 30, from Friday's 24.5.
Gainers outnumbered losers by 222 to 13 on Monday, Thomson
Reuters data showed.
The rupee closed flat at 113.89/90 rupees a dollar
for the fourth straight session, dealers said.
Two currency dealers Reuters spoke to said the central bank
had sold at least $160 million since the devaluation to defend
the currency at the new level amid depreciation pressure. On
Monday, the bank pumped in around $35 million, dealers said.
FACTORS TO WATCH:
- Investors' moods after the devaluation
- The potential for imported inflation post-devaluation
- Reserve cost of defending the new rupee rate
Colombo Stock Exchange:
Stock Market Volume (Shares)
Current Volume Average Volume 30 Days
Yield and Price of Sri Lanka's sovereign bonds:
Maturing year Tenure amount Reuters yield
2012 5-yr $500 mln 6.100-5.814
2014 5-yr $500 mln 5.180-4.846
2020 10-yr $1,000 mln 6.1743-6.0273
2021 10-yr $1,000 mln 6.1298-5.9927
($1 = 113.9250 Sri Lanka rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Bryson