Increasing interest in investing in TBs likely to negatively impact CSE

By Hiran H.Senewiratne

Treasury Bill rates have reached a higher level and people are now more interested in investing in government securities. This will negatively impact the stock market. The weighted average yield of three- year Treasury Bills has increased to 28 per cent per annum, while there is a 26.5 per cent increase in seven- year Treasury Bills. This has resulted in an increasing interest in investing in government securities due to their risk- free nature, but it does not contribute to stimulate economic growth, stock market analysts said.

Meanwhile, CSE stocks rose in mid-day trade yesterday after opening over 1 per cent higher on positive sentiments. This was attributable to the possibility of the country having a new government soon, stock analysts said.

Further, an increase in investments in government securities will move up the cost of borrowings, which has a negative impact for loans that are being raised for economic stimulation, analysts added.

Amid those developments both indices moved upwards. The All- Share Price Index up by 63.52 points and S and P SL20 rose by 29.1 points. Turnover stood at Rs 1.1 billion with a single crossing. The crossing took place in Nestle, which crossed 50000 shares to the tune of Rs 45 million; its shares traded at Rs 900.

In the retail market top seven companies that mainly contributed to the turnover were, Expolanka Holdings Rs 307 million (1.6 million shares traded), Browns Investments Rs 126 million (16.4 million shares traded), Lanka IOC Rs 111 million (1.5 million shares traded), LOLC Finance Rs 106.6 million (13.9 million shares traded), HNB Rs 40 million (512,000 shares traded), LOLC Holdings Rs 31.7 million (78000 shares traded) and Royal Ceramic Rs 23 million (893,000 shares traded). During the day 56.9 million share volumes changed hands in 15000 transactions.

It is said high net worth and institutional investor participation was noted in JKH. Mixed interest was observed in LOLC Holdings, Lanka IOC and Expolanka Holdings, while retail interest was noted in Browns Investments, LOLC Finance and Industrial Asphalts. Transportation sector was the top contributor to the market turnover (due to Expolanka Holdings).

Lanka IOC, LOLC Finance and LOLC Holdings were also included among the top turnover contributors. The share price of Lanka IOC moved up by 10 cents to close at Rs. 74.30. The share price of LOLC Finance recorded a gain of 90 cents (14.52 per cent) to close at Rs. 7.10.

Yesterday the Central Bank announced dollar buying rate was Rs 356.95 and the selling rate Rs 368.30. So far, the rupee has become stable due to the prudent handling of monetary policies, financial sources said.