CSE investors increasingly looking at government securities

By Hiran H.Senewiratne

The current economic meltdown and political instability are discouraging investors from investing in the CSE. They are looking for risk- free investments, such as, government securities, CSE analysts said.

Federal Reserve’s spokesman Jerome Powell, who fired a global commodity and food price bubble by printing large volumes of money into a healthy US banking system, has hiked rates by 50 basis points and promised to withdraw liquidity by selling down Treasury bills and agency debt, market analysts said.

In that scenario Sri Lanka and many developing countries are facing higher food and energy prices (in US dollar terms) because of policy errors of the Fed, which is primarily driven by an employment target. This has also created worries for CSE activities, market analysts added.

Amid those developments the market started its trading activities on a positive note yesterday but later became negative due to external and internal environmental factors. Consequently, both indices moved downwards. The All- Share Price Index went down by 30.4 points and S and P SL20 declined by 32.3 points. Turnover stood at Rs 824 million with one crossing. The crossing took place in Melstacorp, which crossed 800,000 shares to the tune of Rs 29.6 million; its shares traded at Rs 37.

In the retail market top seven companies that mainly contributed to the turnover were; Expolanka Holdings Rs 221 million (1.3 million shares traded), Lanka IOC Rs 102.9 million (2.9 million shares traded), JKH Rs 102.2 million (793,000 shares traded), Royal Ceramic Rs 50 million (1.7 million shares traded), LOLC Holdings Rs 29.4 million (64000 shares traded), Browns Investments Rs 20.7 million (3.6 million shares traded) and LOLC Finance Rs 16.4 million (2.6 million shares traded). During the day 74 million share volumes changed hands in 11000 transactions.

Mixed interest was observed in Expolanka Holdings, LOLC Holdings and Lanka IOC, while retail interest was noted in Browns Investments, SMB Leasing and LOLC Finance.

The transportation sector was the top contributor to the market turnover (due to Expolanka Holdings), while the sector index lost 2.80 per cent. The share price of Expolanka Holdings decreased by Rs 4.75 (2.8 per cent) to close at Rs. 164.75.

The Diversified Financials sector was the second highest contributor to the market turnover (due to LOLC Holdings and LOLC Finance), while the sector index increased by 3.87 per cent. The share price of LOLC Holdings gained Rs. 36.75 (8.40 per cent) to close at Rs. 474.25. The share price of LOLC Finance declined by Rs. 0.10 (1.47 per cent) to close at Rs. 6.70.

Yesterday, the Central Bank- announced US dollar buying rate was Rs 356.83 and selling rate Rs 369.99. In the kerb market this amount would be close to Rs 400.