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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » Is this Crisis due to SEC’s Over Regulations or Illiquidity

Is this Crisis due to SEC’s Over Regulations or Illiquidity

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Aamiable


Vice President - Equity Analytics
Vice President - Equity Analytics
try to attract investments..giving credit is not a solusion... investments would come in 2012.

Stockmate


Manager - Equity Analytics
Manager - Equity Analytics
I had indicated the possible worst bottom in this char months ago.
laka's values matches with it. See the area marked with a Blue curly bracket

https://i.servimg.com/u/f46/16/66/37/07/market11.jpg

Slstock


Director - Equity Analytics
Director - Equity Analytics
@aj wrote:When an investor (may be a foreign fund) want to invest in these stocks, they don't just look at the final profit number or the PE ratio broker reports show. That's how Sri Lankan investors invest. Sri Lankans haven't seen PE ratios like 11, 12 for a while. They thought PE 20s were fairly valued number while anything under 19 was undervalued.

For real investors they check how that profit has come and whether the company can do it consistently over the next years. That's where Sri Lankan companies fail. Look at the stocks with PE under 15 and you'll see the profits came by selling their assets or negative goodwill or giving a higher value for a property they control. These are not profits. For an extreme example, there is a company which sold one of their hotels and showed profits. Some companies wound down companies they own. Even the ones you think are very undervalued, if you look at the numbers closely you'll see the profits are not growing and the expenses are growing. When you give a PE 15 or even 25, there is a reason for doing that. That you expect 'growth'. But almost all of the reputable companies you see don't have that.

That is where CSE fails. The stock prices don't even come close to the core business growth. Other than the manipulated market issue, that's the main reason foreign funds are exiting. You have to blame the company directors.

Aj, sometimes when I read your post I feel you are an extreme bear Wink But there is certainly truth in what you say above, that some companies show inflated profit through games and how the real analysts will look at it negatively.

But, I think if one believes in investment ( with patience), one's job is to identify the few good in the mud and slowly collect. We cannot say all shares at CSE is totally overvalued and crap though they are many which fit the bill.



Side note about foreigners:


CSE is a very small market. Whole market capitalization is significantly below even certain individual companies at NYSE. ( Just look at Exxon for example) .


Though small, CSE is still very much reliant on foreigner inflow whether it is good or bad. Foreign funds buy early ( opposite to us) and sell when their targets are accomplished , when companies are overvalued, or maybe simply when they need money. There might be foreigners who bought at dirt cheap before the boom CSE and now exiting for one of the reasons I mentioned above. So ot is important identify why at times foriegner are selling certain share. If the company you hold is solid do not panic. They maybe exiting for profit.

Also note at the same time foriegner usually will buy higher market capitalization and higher liquid companies. Unfortunately most of these companies at CSE maybe not bargains yet for them to buy back. But it does not mean there are no good shares at CSE Wink

One fine day , hope we will not be so dependent on foreigners. But right now there things we can learn from them like when to enter and exit market.

rijayasooriya


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@laka wrote:Simply we need cash inflows for Blue Chips to make them liquid. Since local investors are suffering with lack of cash,we highly need foreign inflows. It’s better if we could avoid foreign selling and exit. Expropriation Bill also adversely affects to discourage foreign participation.CSE and Stock Brokers have to do more road shows in abroad to attract them.
I can not understand this policy.If our market is attractive why we should go after foreigners ? Do we want to give them an oppurtunity to invest now and then sell it to us later with a huge profit ? What will happen ? Our money will flow out from our country.Is it beneficial to our country ?
Who are the local investers who lack money ? We should motivate our local investers and at the sametime government funds can invest now.If this is a golden oppurtunity why do we hand over it to foriegners ?
I raised this issue several times in this forum but only few seems to be interested.

Stockmate


Manager - Equity Analytics
Manager - Equity Analytics
rijayasooriya

We need about a trillion. If the ETF fund is fully invested in stocks problem solved. But that never happens.

rijayasooriya

rijayasooriya
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@Stockmate wrote:rijayasooriya

We need about a trillion. If the ETF fund is fully invested in stocks problem solved. But that never happens.
If that trillion is invested by foreigners how much money will flow out of our country when they exit ?

Stockmate


Manager - Equity Analytics
Manager - Equity Analytics
Stock markets are open to all. we also can invest in other markets. When we exit with a profit some money flows out from those markets too. But our market can not exist without foreign money as the local money that flows in to the market is less. last IPO barrage devoured much of it. They are locked up in IPOs. Later IPOs lost ground as inflow of money was low.

laka

laka
Senior Equity Analytic
Senior Equity Analytic
@Stockmate wrote:rijayasooriya

We need about a trillion. If the ETF fund is fully invested in stocks problem solved. But that never happens.

You are 100% correct ..That's why we need foreigners.

aj


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
We need more IPOs. After 2009 what happened was that everybody bid for the same small number of companies. The market was over saturated and then became over priced. We shouldn't do that mistake again. New IPOs must be introduced to stop the existing old stocks becoming overpriced and fat.

laka

laka
Senior Equity Analytic
Senior Equity Analytic
To all,
Thanks a lot for your appreciations.

I never expected this kind of appreciations from this forum. Smile

aj


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Don't forget we have billions of dollars of foreign inflow to the country. But they don't buy undervalued (in your opinion) stocks but they go for direct investment in the projects. Why buy expensive shares when they can directly invest and harvest the profits.
Just because the PER is under 10 in the broker reports don't think they are undervalued. Check how they came up with those numbers. Local people can be fooled. But the foreign funds can't.

UKboy

UKboy
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@rijayasooriya wrote:
@laka wrote:Simply we need cash inflows for Blue Chips to make them liquid. Since local investors are suffering with lack of cash,we highly need foreign inflows. It’s better if we could avoid foreign selling and exit. Expropriation Bill also adversely affects to discourage foreign participation.CSE and Stock Brokers have to do more road shows in abroad to attract them.
I can not understand this policy.If our market is attractive why we should go after foreigners ? Do we want to give them an oppurtunity to invest now and then sell it to us later with a huge profit ? What will happen ? Our money will flow out from our country.Is it beneficial to our country ?
Who are the local investers who lack money ? We should motivate our local investers and at the sametime government funds can invest now.If this is a golden oppurtunity why do we hand over it to foriegners ?
I raised this issue several times in this forum but only few seems to be interested.

I dont think foreigners are absolutely necessary part of any market in the world.

However it’s a very very clear indication that tells us how healthy the market is.
If foreigners keep coming to a market we can assume that market is attractive. When foreigners achieved their targets they tend to leave markets. This process speeds up when a market is over heated or a government introduces unfriendly business polices.

rijayasooriya

rijayasooriya
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@laka wrote:
@Stockmate wrote:rijayasooriya

We need about a trillion. If the ETF fund is fully invested in stocks problem solved. But that never happens.

You are 100% correct ..That's why we need foreigners.
I do not say we do not need foreigners.My point is why are we going behind foreigners when market is attractive ? We should motivate our local investers.How many local people have invested in CSE ? I think it is very low as a percentage.They need good motivation and proper guidance.

kam2011


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@kama wrote:I wish we had rep system to give you + rep.

People like dindon, amilaela, rajaram, sanjaya351, bakapandithaya, krishanakash, and bla bla bla should read this without daydreaming...

kama,
That means my friend, You also believe ASI would come down to 5000 level and if foreign investment flow is not sufficient ASI would drop to 4000? In that case you all can become winners by selling you PF at your earliest. Why not you do that?






laka

laka
Senior Equity Analytic
Senior Equity Analytic
@rijayasooriya wrote:

I do not say we do not need foreigners.My point is why are we going behind foreigners when market is attractive ? We should motivate our local investers.How many local people have invested in CSE ? I think it is very low as a percentage.They need good motivation and proper guidance.

I also don't like to depend on foreigners. Since our market capitalization was increased by 400% to Rs 2.2 T, our so called investors can't afford this. CSE didn't have much real cash inflows compared
to such high increase in Market Capitalization. What our HNWI did is changing share parcels with each other rather than entering new money to the system. That's why we should be thankful to
SEC for stop this circle. Otherwise ASI would hit 12,000 and then lead to Bangladesh type Crash...

There should be positive relationship between cash inflows and Market Capitalization.



Last edited by laka on Wed Dec 21, 2011 2:52 pm; edited 3 times in total

Kumar

Kumar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@rijayasooriya wrote:
@laka wrote:
@Stockmate wrote:rijayasooriya

We need about a trillion. If the ETF fund is fully invested in stocks problem solved. But that never happens.

You are 100% correct ..That's why we need foreigners.
I do not say we do not need foreigners.My point is why are we going behind foreigners when market is attractive ? We should motivate our local investers.How many local people have invested in CSE ? I think it is very low as a percentage.They need good motivation and proper guidance.

According to Wikileaks articles released in the past there are so much money invested in Swiss bank from Sri Lanka.
Why those guys who are loving our motherland do not want to invest in CSE?

kama


Manager - Equity Analytics
Manager - Equity Analytics
@kam2011 wrote:
kama,
That means my friend, You also believe ASI would come down to 5000 level and if foreign investment flow is not sufficient ASI would drop to 4000? In that case you all can become winners by selling you PF at your earliest. Why not you do that?

I don't like to realize my huge losses.Further I don't like day dreaming also..





[/quote]

bakapandithaya

bakapandithaya
Vice President - Equity Analytics
Vice President - Equity Analytics
I think coz 4 da problem is SEC over regulation

laka

laka
Senior Equity Analytic
Senior Equity Analytic
@bakapandithaya wrote:I think coz 4 da problem is SEC over regulation

No. You should be thankful to SEC for over regulations. otherwise ASI is now below 5,000.
If possible pls read ful article.

bakapandithaya

bakapandithaya
Vice President - Equity Analytics
Vice President - Equity Analytics
@laka wrote:
@bakapandithaya wrote:I think coz 4 da problem is SEC over regulation

No. You should be thankful to SEC for over regulations. otherwise ASI is now below 5,000.
If possible pls read ful article.

I already read da article. u mean price band, credit clearance are favourable for cse. Then y foreigners are running out. Im sure these regulation reduced mkt manipulation & good 4 investors. But 4 da downtrend, SEC is responsible

laka

laka
Senior Equity Analytic
Senior Equity Analytic
@bakapandithaya wrote:
I already read da article. u mean price band, credit clearance are favourable for cse. Then y foreigners are running out. Im sure these regulation reduced mkt manipulation & good 4 investors. But 4 da downtrend, SEC is responsible

Simply in last September they realized that cash position of mkt is not sufficient to face such
400% increased mkt capitalization.That's why they did like that since they are educated than u and me.Foreigners are running are running out because they know future is worse than present..
When you see foreign inflows of atleast Rs 2Bn , this is the time to buy...
IMO we need more than Rs 10Bn inflows



Last edited by laka on Wed Dec 21, 2011 3:22 pm; edited 1 time in total

bakapandithaya

bakapandithaya
Vice President - Equity Analytics
Vice President - Equity Analytics
@laka wrote:
@bakapandithaya wrote:
I already read da article. u mean price band, credit clearance are favourable for cse. Then y foreigners are running out. Im sure these regulation reduced mkt manipulation & good 4 investors. But 4 da downtrend, SEC is responsible

Simply in last September they realized that cash position of mkt is not sufficient to face such
400% increased mkt capitalization.That's why they did like that since they are educated than u and me.

they may b educated than u. i agree. How u say than me? Twisted Evil

laka

laka
Senior Equity Analytic
Senior Equity Analytic
@bakapandithaya wrote:

they may b educated than u. i agree. How u say than me? Twisted Evil

Sorry for making Judgment A Book By Its Cover.. Razz

Rajaraam


Vice President - Equity Analytics
Vice President - Equity Analytics
@kama wrote:
@kam2011 wrote:
kama,
That means my friend, You also believe ASI would come down to 5000 level and if foreign investment flow is not sufficient ASI would drop to 4000? In that case you all can become winners by selling you PF at your earliest. Why not you do that?

I don't like to realize my huge losses.Further I don't like day dreaming also..





[/quote]


kama, Read following link. Is it not a day dreaming?


http://forum.srilankaequity.com/t7766-mori-is-it-valued-more-than-4000#5278

Rajaraam


Vice President - Equity Analytics
Vice President - Equity Analytics
@kama wrote:I wish we had rep system to give you + rep.

People like dindon, amilaela, rajaram, sanjaya351, bakapandithaya, krishanakash, and bla bla bla should read this without daydreaming...

Aah,Is that so? From when did you change your mind? Have you stop your promotion.
Read one of your posts which has a possibility to misguide small investors.Dont you think so?

http://forum.srilankaequity.com/t7208-brwns-investments#49142



Last edited by Rajaraam on Wed Dec 21, 2011 10:31 pm; edited 1 time in total

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