Tuesday, July 27, 2010

Merchant Bank’s Midcap Index reaches 10,000 mark

Merchant Bank of Sri Lanka’s (MBSL) Midcap index reached 10,029.78 points this month, a 122 percent increase from a year ago.

The MBSL Midcap index which was launched in 1999 is revised annually based on three broad criteria in selecting twenty five stocks for the index. MBSL changed its Midcap Index with effect from 4th January 2010 based on the following.
  •  Market capitalization – medium scale entities
  • Liquidity of the stock
  • Profitability during the last two years
The following graph depicts performance of the MBSL Midcap, ASPI and MPI indices from June 2009 to 23rd July 2010.

It is evident in the above graph that the MBSL Midcap Index is on an upward momentum, indicating a widen range compared to ASPI and MPI indices. Market earnings potential in the new era of positive momentum and the increase in tourism were driving most of the medium market capitalisation companies while sector based favourable conditions have been driving most of the equity counters in the Colombo Stock Exchange.

The following table illustrates the point–to–point view on the index performance. As stated below, although both the ASPI and MPI have moved on the upward momentum during the period concern whilst the Merchant Bank’s Midcap Index has grown in a considerable manner.

When compared with the previous year June ASPI, it improved by 122% with the overall market capitalisations improving and more counters getting the listings on the Board. The Milanka Price Index which covers the sensitive counters in the market improved by 121% indicating that the strong holds have grown in a similar pattern to the ASPI.

Midcap index on the other hand has moved by 115% against 1st June 2010. The midcap index has moved on a lower percentage to the ASPI and Milanka index. This is an indication for strong midcap companies to have growth prospects for the future and from the business opportunities arising from the Eastern and Northern provinces.


source - www.island.lk

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