External and internal factors set stage for CSE revival

By Hiran H. Senewiratne

The CSE rose over 1 per cent within the first hour of trading yesterday, continuing the momentum from the previous day, unfolding a stock market driven by retail investors. The reasons for the market to bounce back were external and internal factors, stock market analysts said.

One external factor that propelled the market was the Asian Development Bank (ADB) reassurance of further support for crisis-hit Sri Lanka once the International Monetary Fund Board approves the US $ 2.9 billion four-year Extended Fund Facility program.

ADB President Masatsugu Asakawa told journalists that reaching the Staff Level Agreement by Sri Lanka with the IMF earlier this month was a positive development and expressed confidence in the government receiving “financing assurances” from relevant creditors leading up to the IMF Executive Board approving the new support program for Sri Lanka.

A further factor that positively impacted the market was the Export Development Board report that our export earnings from the beginning of the year to August this year reached more than US $ 8 billion, which was a 12 per cent increase, stock market analysts said.

Amid those developments both indices moved upwards. All Share Price Index went up by 97.25 points (0.99 per cent) to end of the day at 9958.87 and S and P SL20 gained 22.71 points (0.72 per cent) to end of the day at 3187.22. Turnover stood at Rs 3.1 billion without a crossing.

In the retail market top seven companies that mainly contributed to the turnover were, ACL Cables Rs 458 million (3.8 million shares traded), Lanka IOC Rs 299 million (one million shares traded), Expolanka Holdings Rs 198 million (890,000 shares traded), Lanka Wall Tiles Rs 169 million (2.2 million shares traded), First Capital Holdings Rs 121 million (6.2 million shares traded), Royal Ceramic Rs 106 million (2.5 million shares traded) and First Capital Treasuries Rs 101 million (4.4 million shares traded). During the day 181 million shares changed hands in 33000 transactions.

Between early August and yesterday, SG Holdings is estimated to have acquired 67 million shares or a 3.7 per cent stake in Expolanka at a price range of Rs. 200 and Rs. 230 per share.

It is said buying in September alone resulted in a net inflow of Rs. 14.6 billion to the stock market and more importantly boosted liquidity of those who sold out of Expolanka. On the previous day Expolanka saw 11.6 million of its shares change hands via 883 trades for Rs. 2.65 billion. It closed at Rs. 224.75, up by one rupee. Expolanka’s market value was Rs. 439.3 billion as of yesterday accounting for 10 per cent of CSE’s total.

Yesterday the Central Bank- announced US dollar buying rate was Rs 359.18 and the selling rate Rs 369.93.