FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.
FINANCIAL CHRONICLE™

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka

LISTED COMPANIES

Submit Post
STOCK MARKET TRAINING
ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post


CONATCT US


Send your suggestions and comments

* - required fields

Read FINANCIAL CHRONICLE™ Disclaimer

EXPERT CHRONICLE™

ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)


CHRONICLE™ YouTube

CHRONICLE™ NEWS PRODUCTS

FINANCIAL CHRONICLE™

Views & Reviews, Analysis, Evaluations, Discussions, Gossip and Hot Tips relating to Sri Lankan companies listed on the Colombo Stock Exchange (CSE)
Contribute




DAILY CHRONICLE™

Latest news and articles published in Newspapers, Websites, Blogs and other online news sites relating to business and investments in Sri Lanka
Contribute



ECONOMIC CHRONICLE™

This is a section that provide news, views, analysis, predications relating to Political and Socio-Economic factors and how such activities affect the Stock Market and other economic activity of the Country.

Contribute




EXPERT CHRONICLE™

This is an exclusive section for Expert Articles which will help member to share knowledge through comments and responses of the members. All members are allowed to reply and make comments to these articles.

Contribute


Submit Post


CHRONICLE™ YouTube

Youtube Videos and other visual presentations relating Stock market and other investment advise submitted by members or other contributors.

Contribute


Submit Post


කොළඔ කොටස් වෙළඳපොළේ වංශකථාව
කොළඔ කොටස් වෙළඳපොළේ ලැයිස්තුගත සමාගම් කොටස් ගැන තොරතුරු¸විශ්ලේෂණ¸සාකච්ඡා¸ කටකතා¸රසකතා යන සියල්ල අපේම සිංහලෙන් කතා කළ හැකි ‘කතා මණ්ඩපය’

Contribute


Submit Post

CHRONICLE ANALYTICS
All Share Index (ASI), S&P, Milanka Price Index (MPI), Moving Averages and all other analytical graphs and charts

Contribute

Twitter Feeds

You are not connected. Please login or register

FINANCIAL CHRONICLE™ » EXPERT CHRONICLE™ » Why am I so pessimistic about Sri Lanka's Equity Market

Why am I so pessimistic about Sri Lanka's Equity Market

Go to page : Previous  1, 2, 3

Go down  Message [Page 3 of 3]

Quibit


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
I have listed below the reasons why I am so pessimistic about the current investment opportunities in the Colombo Stock Market.

a) Interest rates are on its way up.

From as low as 7% p.a interest rate few months ago the rates are spiraling upward with each bank competing with the one another to attract deposits. Few weeks ago I noticed one of the leading listed commercial bank (Nation Trust Bank) offering 12% p.a for 6-12 months deposits via email campaign few days later be out done by Pan Asia Bank with a offer of 15% p.a for 5 year deposits. With this trend 20% p.a is not impossible!!

As a depositor I am delighted to see this kind of increase in interest rates, which will make my money work for me without my having to work at all. If interest rates are going to be above 15%p.a it may not be a bad idea for me to sell all my business including stock market investment and deposit everything in a fixed deposit. Tell me any business that could guarantee you 15% Net Profit per annum without any risk!! Wow is going to be wonderful!!

Although I am delighted personally the impact of interest rates to the economy is likely to be horrendous. High interest rates will drive away the investors from stock market towards debt market, drying the opportunities that prevailed in the capital market for companies to raise low cost equity funding for their operations and future expansions. Alternatively companies will now have to resort to borrowed capital which will significantly reduce the future profitability and corporate earnings. This will further have a significant impact on the stock valuations and market capitalization. Will stock market slump further!! ASI 4000??... only time will tell us.

b) Sri Lankan Rupee devaluation

You hear every where, that Sri Lankan Rupees is likely to be devalued soon!!. Some say its 5% others say its by 20%. This apparently to reduce the pressure on Sri Lanka's Foreign currency reserves and resultant high interest rates. Whatever is the case, this is likely to have sever impact to the economy. Can devaluation of the rupee could solve the current crisis. To me, answer is no !!! Sri Lanka is a import driven economy and any devaluation in of the rupee is likely to have a significant impact on inflation (The Cost Push Inflation) and intern the cost of production and services of all companies and industries. Among our imports Crude oil remain one of the biggest import cost to the country and any notable increase is likely to have a significant impact to all sectors of the country including high depended Transport, Electricity, manufacturing sectors.

c) Iran Crisis.

Crude oil crisis is far more than a domestic problem. Sri Lanka imports significant component of oil from Iran. I guess its over 90% of total imported to Sri Lanka. This is as a result of generous credit period offered by the Iran. Under the current crisis and impeding embargo's Sri Lanka will be compelled to purchase oil from alternative sources. Further if Iran proceed with its own embargo's then it is likely to that world crude oil prices will reach record high resulting in sever crisis across the world.

What is good to buy and what is not!!

Banks
I would buy Banks. Coz bank would be a beneficiary in an high interest rate environment due to higher interest spread. Commercial Bank, HNB, NDB and Sampath seems quite attractive.
Hotels
I would buy hotels coz as a result of Rupee devaluation Sri Lankan hotels would cheaper and more attractive to the foreigners. Rupee earnings of hotels are likely to increase resulting in higher corporate earnings.
Motor
I would sell out of Motor Trading Companies such as DIMO, United Motors, Sathota, Colonial etc coz high fuel cost and depreciation of the rupee will reduce the short to medium term demand for motor vehicles. High interest rates also will dicourage people from taking leases.
Plantations
Significant component of Sri Lanka's tea is exported to Iran, Syria and to other arab countries. Any benefit we are likely to derive from the devaluation of the rupee is going to be off set by the likely reduction in demand for tea from Iran, Syria and Middle Eastern Countries due anticipated crisis. So I will not touch tea. But natural rubber is likely to be high in demand as a result of the higher cost of artificial rubber due to expected increase of crude oil. Good luck for rubber plantation.

Above post is a personal opinion of the writer based on current local and global events purported to be affecting the Stock Market and should under no circumstances be considered as Research or Recommendation to buy or sell shares



Last edited by Quibit on Sat Feb 11, 2012 8:49 am; edited 1 time in total

Share this post on: redditgoogle

GMNet wrote:It is always nice to go back in time to read some of the old posts and analysis. It would put your thought and future analysis in the right perspective. I particularly like this post made by Quibit.

4 months later it still hold some truth!

Thanks Quibit.Can't we move this to expert chamber?

@Redbulls wrote:
GMNet wrote:It is always nice to go back in time to read some of the old posts and analysis. It would put your thought and future analysis in the right perspective. I particularly like this post made by Quibit.

4 months later it still hold some truth!

Thanks Quibit.Can't we move this to expert chamber?
Trend started reversing, Crude oil prices dropping drastically, reaching 2 year low.I'm sure CPC is enjoying huge profits and will deleverage reducing huge public debt. Private sector credit in month of May fallen drastically to 18 billion from 55 billion rupees previous month,which is 17 month low. This will reduce the pressure on rupee and will stabilized or can even strengthen. We will see interest rates heading south sooner than later as demand for credit is diminishing . We saw some treasury bill yields are falling. How ever if we deposit now in longer term deposits, we can get good return over the next five years as suggested by Quibit.
Would like to hear others opinion as well

Why did the oil prices come down? Less demand? Less energy consumption? Not much happening in the economies around the world?

Why did interest rates stagnate? People would happily grab even low interest rate to save their money? Lenders don't have to give high interest to attract the people because they're already coming?

Interest rates are still moving up! CBSL might revise policy rates!
Banks are getting ready for the next wave!
DFCC Vardhana is offering 14% for 6 months
NDB is offering 14% p.a for 1 year.
NTB is offering 14.5% p.a for 1 Year.
HSBC is offering 19% p.a for 5 Year deposits!!

Are we on top of the interest rate curve???
Is it a good idea to sell the residue stocks and deposit money in these high yielding deposits?

GMNet wrote:Interest rates are still moving up! CBSL might revise policy rates!
Banks are getting ready for the next wave!
DFCC Vardhana is offering 14% for 6 months
NDB is offering 14% p.a for 1 year.
NTB is offering 14.5% p.a for 1 Year.
HSBC is offering 19% p.a for 5 Year deposits!!

Are we on top of the interest rate curve???
Is it a good idea to sell the residue stocks and deposit money in these high yielding deposits?
Consider the inflation rate before committing to any investment.

K.Haputantri

Post Sun Jul 15, 2012 5:26 pm by K.Haputantri

@WildBear wrote:
@Redbulls wrote:
GMNet wrote:It is always nice to go back in time to read some of the old posts and analysis. It would put your thought and future analysis in the right perspective. I particularly like this post made by Quibit.

4 months later it still hold some truth!

Thanks Quibit.Can't we move this to expert chamber?
Trend started reversing, Crude oil prices dropping drastically, reaching 2 year low.I'm sure CPC is enjoying huge profits and will deleverage reducing huge public debt. Private sector credit in month of May fallen drastically to 18 billion from 55 billion rupees previous month,which is 17 month low. This will reduce the pressure on rupee and will stabilized or can even strengthen. We will see interest rates heading south sooner than later as demand for credit is diminishing . We saw some treasury bill yields are falling. How ever if we deposit now in longer term deposits, we can get good return over the next five years as suggested by Quibit.
Would like to hear others opinion as well
Interesting analysis, you see some silver lining in the already dark sky, when all the others are pesimistic. I have no reason to disagree with your point Wildbear, but ?Don't you think the intended improvements in the BOP account is only a temporary respite, because lesser fuel consumption means a sure sign of slowing down of the world economy which might boomarang on nations like us heavily dependant on world trade.

@K.Haputantri wrote:
@WildBear wrote:
@Redbulls wrote:
GMNet wrote:It is always nice to go back in time to read some of the old posts and analysis. It would put your thought and future analysis in the right perspective. I particularly like this post made by Quibit.

4 months later it still hold some truth!

Thanks Quibit.Can't we move this to expert chamber?
Trend started reversing, Crude oil prices dropping drastically, reaching 2 year low.I'm sure CPC is enjoying huge profits and will deleverage reducing huge public debt. Private sector credit in month of May fallen drastically to 18 billion from 55 billion rupees previous month,which is 17 month low. This will reduce the pressure on rupee and will stabilized or can even strengthen. We will see interest rates heading south sooner than later as demand for credit is diminishing . We saw some treasury bill yields are falling. How ever if we deposit now in longer term deposits, we can get good return over the next five years as suggested by Quibit.
Would like to hear others opinion as well
Interesting analysis, you see some silver lining in the already dark sky, when all the others are pesimistic. I have no reason to disagree with your point Wildbear, but ?Don't you think the intended improvements in the BOP account is only a temporary respite, because lesser fuel consumption means a sure sign of slowing down of the world economy which might boomarang on nations like us heavily dependant on world trade.

Crises creates opportunities for investors, while some perish. the good thing about recessions is they do not last long for years, not even the great depression in 1929. If you can remember the last bear period we had is from mid 2008 to mid 2009. Sri Lankan economy and markets ware affected by many ways
1- Global economic downturn
2-Climax of terrorist activities with intense security measures around country
3- Property bubble and collapse of property companies and market like The Finance,Golden Key.

However those who selected their own investment vehicles for different reasons during that bear period were winners by 2011.

Some invested in long term debt instruments which gave interest rates closer to18- 20 % p.a, during the period around 2007-2008.
some invested in properties at dirt cheap during the burst of the property bubble and enjoyed hefty gains later.
Some invested in Stocks, We know how many people become millionaires by 2011 !.
Some people invested in commodities like Gold, Gold also appreciated more than 100 % during last couple of years.

So we should be able to identify our own investment instruments at correct time to reach our destination. For that, as an expert member of a previous forum says "We Should have above average knowledge" Laughing

Quibit. you were very pessimistic in 2012 February and how come you are very optimistic about the market in 2014 June???

It is interesting to read your analysis?

SHARK aka TAH

Post Sat Jun 14, 2014 11:21 am by SHARK aka TAH

Quibits comments during Feb 10, 2012 was interesting on banks front.Back then SAMP was trading around 170Rs and fell towards 150 and then risen towards 240. Back then interst rates were high and quite not sure why fell towards 150Rs. how ever gaining 90Rs since then to peak. And what has changed since then. Interests rates are LOW. Gold  rates DOWN affecting significantly lending. consolidation of Financial sector as per CBSL will help maintain Earnings.

However Banks will be able lend loans with innovative thinking and marketing tactics.
Public and private entrepreneurs will be encouraged to obtain loans for SME and spur economic growth in private sector.

So there is 2 sides for current phase in Banks and Finance companies.

The idea of CBSL is a positive and timely move in my personal opinion.....

So limited upside for companies not able to link up with the Giants

Back to top  Message [Page 3 of 3]

Go to page : Previous  1, 2, 3

Permissions in this forum:
You cannot reply to topics in this forum