What Ails the Market?
by Sarath Rajapaksa
Dec 13, 2011 (LBT) – We have a market sympathetic SEC Chairman taking charge of the ailing regulatory body and a handpicked qualified and experienced Director General on his way to Sri Lanka to come and assume duties shortly.
The rest of the problematic insiders are on their way out. All the market repressive regulations are to be repealed as agreed by the President within a week.
But then why is the market so weak??? That is the question everybody is asking. The reasons are clear. The regulatory repression that lasted for over a year resulting in the indices falling by over 2000 points, has effectively disabled the market.
More drastic surgery is needed to revive it again. Almost all the small and medium investors have lost all their money and available margins during the repression when ruthless margin calls and forced sales wiped out their major savings.
The Government and the agencies coming under it with money to invest must now intervene positively, actively and persistently if they are to resurrect the paralyzed market.
They should not only buy the aristocratic blue chips but also should start investing heavily in so called ‘popular riff raff’ such as GREG, CLPL, TWOD, DPL, REEF, CLND, HVA, RGEM, MFL, BFL,TAFL, BAFL, GRAN, BLUE etc where the margins of small and medium investors have really got stuck in. Or in the alternative allow margins of up to 75% and remove all restrictions and ceilings on margin lending exposure imposed on banks as they did in Bangladesh after the crash. Most of the market movers and shakers who were abroad last week were not yet back in the market.
We repeat the fact that the market still continues to offer a gold mine of great buying opportunities. You may regret later if you miss the chance now to latch in to the absolute bargains galore still available.
Shocking. Many small timers were ripped off with their help, in fact broker firms should pay the small investors the money they lost not EPF and ETF.