The equity market this year has experienced a net foreign inflow of nearly 3 billion in 3 months with todays inflow bringing the figure to nearly 17 billion. The total foreign outflow last year was 19 billion hence almost the entire outflow has been returned to the market. I know for a fact these funds do extensive in depth research about the countries and companies that they are interested in before entering. So the big question is why are these mysterious foreign investors from various countries and wealth funds run by highly professional career fund managers clamouring to enter our market in such a hurry..
What fools rite?
Dont they see our rupee fluctuating wildly against and dollar?
Didnt they hear about the pending geneva resolution?
Dont they know we are in the middle of a balance of payment crisis?
Havent they seen on bloomberg that the CSE is the 2nd worst performing market in the world this year?
Dont they know our regulators are utter Fools who dont know anything about regulating or stock markets?
Didnt anybody tell them for the 1st time in history the trading software update done by the cse has infact been a dowgrade with the system making it even harder for people to trade?
But lets Try to see what these idiots see that we dont see.
The rupee fluctuations - the ruppee wont fluctuate wildly forever. Eventually it will find its support level and stabilize. It is infact a good thing that the fool cabraal atleast now removed the peg on the rupee because if it went on for a while longer it would have depleted all of our foreign reserves. So the foreigners see this as a positive step towards stabilizing the economy plus they might get a currency gain also.
The geneva resolution - its put to vote on the 23rd. If it gets passed it means the government has to complete the suggetions given by its own LLRC. Why is dat a bad thing? We should enact those proposals to bring lasting peace to the country. If it gets defeated even better. We dont hav to comply with undue foreign influence. Overall this is a short term issue dat will hav no real impact.
CSE being the 2nd worst performer in the world - they just love it. What an amazing opportunity to pick up counters at dirt cheap prices in a country that is ticking along at an amazing 7% GDP also with companies recording high Profit growth of nearly every qtr.
BOP crisis- BOP Crisis is a cyclical event for any country which has a central bank instead of a monitory board and a soft peg on its currency. Sri lanka specifically goes through this crisis every 4 years. Its not the end of the world. Remember one time during the war we only had two weeks worth of reserves left at the treasury for payments. We are still here right? Its not even close to being that bad this time. Plus the CB even though late has taken the right measures of curbing credit, reducing fuel subsidies and floating the currency to rectify this problem.
Idiotic regulators - regulators are irrelavent as whatever rules they enact only effect short term tradors. Long term the impact of regulatory blunders are ironed out.
ATS 7 downgrade - even though hilarious that sri lanka stock exchange has been given a software downgrade it will get resolved shortly with the updates so its just another short term problem. Doesnt hav any impact on their decesion making.
Plus with the various foreign FDI's and equity inflows that will trickle in slowly will ease the pressure on the money markets eventually and the intrest rates will stabilise and start to come down. It wont happen immiediatly but it will happen medium term. So for the mysterious foriegners its an easy decesion to invest in the CSE while our poor local investing public is all depressed and fearfull concentrating on these short term problems.
If you analyse closely most of the blue chips have bottomed out and are either rising slowly or stagnating and the MPI is moving up more than the ASI for a couple of days this week I felel it will eventually overtake the ASI as it used to be and move up gradually.
Sadly still Bears are rampent locally while foreign bulls come charging in!