The bourse, dogged by its recent history of market manipulation where the alleged miscreants of such misdeeds have gotten away scot free, coupled with a rising interest rate regime which makes the fixed income market more attractive than the equities market, has therefore resulted in the bourse, since the beginning of the year falling by 11.3% to 5, 387.40 points on the benchmark ASPI index and by 6.4% to 6,215.63 on the blue chip MPI as at Friday.
During the review period market capitalization (ie shareholder wealth) too declined by 6.6% to Rs. 2,068.8 billion.
On a year on year basis the ASI has fallen by 10.6%, MPI by 6.8% and shareholder wealth by 5.8%.
A market source told this newspaper that among the losers were high networth individuals and retailers.
He further said than when the market experienced a boom after the war end 2½ years ago, as if as a seeming contradiction, those foreign investors exited from the bourse while local investors came in.
It were the latter who have got their fingers burnt, investing in junk stocks engineered by market manipulators.
However that may be in the current scenario where the bourse is on a bear run, foreign investors are now returning to the bourse and buying good stocks at a discount, taking advantage of the depressed market scenario that exists in the present environment.
However that may be, on a week on week (WoW) basis the aforesaid market indicators have had made marginal gains, with the ASI increasing by 0.7%, the MPI by 0.5% and shareholder wealth by 0.7%.
DaiIy market turnover last week averaged at Rs. 538 million, which was also a 3.7% WoW gain.
During the course of the year the Securities & Exchange Commission introduced a new index called S&P SL 20 which it said has a wider representation than the MPI.
That index, which will be replacing the MPI from next year, has, also, on a WoW basis, grown marginally by 0.4% to 2,953.62 points.
Meanwhile the only bright spot in this otherwise “gloom and doom” scenario is the receipt of foreign inflows on a net basis to the Colombo stock market.
According to Central Bank of Sri Lanka, this figure, in the 10 month period ended October was US$ 268.4 million.
A market source told this newspaper that foreign portfolio investments are driven by interest in selected blue chip stocks such as John Keells Holdings, Nestle, Ceylon Tobacco, Commercial Bank and Hatton National Bank (mainly the purchase in those banks’ non voting shares).
That is quite a part from the one off transaction of a block of Aviva NDB shares previously held by NDB and its subsidiaries, and valued at $ 59 million in total, including a block that was executed as an offmarket transaction last week, where the buyer was AIA, a foreign insurer, it its quest to gain controlling interest of Aviva NDB, which stocks were also not only bought from NDB, but also that part of a controlling stake of the local insurer, held by Aviva, UK as well, by AIA last week.