Dip in CSE investor participation following policy interest rate hike speculation

By Hiran H. Senewiratne

Investor participation in the CSE was substantially low yesterday as most investors were expecting the Central Bank to hike policy interest rates at the monthly monetary policy review meeting today. The policy rate hike will likely affect equity markets like the stock market and those funds will probably transfer to government securities. However, the government had recently jacked up the Treasury Bond rate, market analysts said.

CSE trading started on a negative note and subsequently recovered for a short period yesterday. But during the latter part of the day the market could not maintain its momentum and moved to negative territory, stock analysts added.

Due to internal and external environmental concerns, stock market investor participation did not reach satisfactory levels. Due to that the turnover level was also below average. The All- Share Price Index went down by 214 points and the S and P SL20 declined by 77 points. Turnover stood at Rs two billion with two crossings. Those crossings were reported in Browns Investments, which crossed ten million shares to the tune of Rs 119 million, its shares traded at Rs 11.90 and TJ Lanka 750,000 shares crossed to the tune of Rs 30.7 million; its shares traded at Rs 41.

In the retail market top seven companies that mainly contributed to the turnover were; Expolanka Holdings Rs 390 million (1.4 million shares traded), Lanka IOC Rs 187 million (2.9 million shares traded), Commercial Leasing and Finance Rs 142 million (three million shares traded), Browns Investments Rs 110 million (9.3 million shares traded), LOLC Finance Rs 87.3 million (3.9 million shares traded), Softlogic Capital Rs 81.3 million (5.6 million shares traded) and LOLC Holdings Rs 77.7 million (830,000 shares traded). During the day 73 million share volumes changed hands in 25000 transactions.

It is said high net worth and institutional investor participation was noted in Sunshine Holdings, LOLC Holdings and Watawala Plantations. Mixed interest was observed in Expolanka Holdings, Commercial Leasing and Finance and Lanka IOC, while retail interest was noted in SMB Leasing voting and nonvoting, Browns Investments and Industrial Asphalts.

The Index inched up at the beginning and displayed a straight fall afterwards while hitting a low. Eventually, the market managed to recover earlier losses during mid-day but failed to retain and traded negatively throughout the session, stock brokers said.

Separately, Lanka Walltiles and Softlogic Life Insurance announced their interim dividends of Rs 1.70 and Rs 2.80 per share respectively.

Yesterday the US dollar was quoted at Rs 201.71, which was the Central Bank controlled rate. But in the outside market, the dollar was selling at Rs 240 and above, financial analysts said. If the government goes to the IMF, the Central Bank will not be able to impose the Rs 203 ceiling, which will allow a free float of the currency.