CSE on a correction; analysts say will recover soon

Stock analysts say the Colombo Stock Exchange which is undergoing a "market correction" following several regulatory actions by the Securities and Exchange Commission will come back to normal very soon.

The All Share Price Index of the Colombo Stock Exchange declined by 4% yesterday according to the www.cse.lk
Sanjitha Rajasekeran, the Research Head of Asia Securities said "it was a long awaited correction".

However commenting on the SEC actions she said "it was a right move, but I don't know whether it was rightly timed".

Rajasekeran added that the move hindered the investor sentiment thus resulting in the market losing nearly 100 points during the last 2 trading days. However she said the market will start "consolidating" soon.

Dinal Wijemanna the Head of Taprobane Securities commenting on the SEC move said "People have to look at the fundamentals"

He said this trend cannot continue as this kind of share price rise is not sustainable in any market. Wijemanna added "we felt some action is needed".

He also said that SEC has to continue to safeguard the investors and commented that "they are not targeting any particular company and only targeting stocks with price manipulation".

He said in the longer run the investors will view these actions very positively.

Meanwhile a Stock Analyst who did not want to be quoted said the actions by the SEC is good, however added that "it should have ideally come earlier".

According to the analyst the buying interest in the market is still there and once the ongoing temporary price correction ends, the fundamentally sound stocks will come back.

However he said the price banner imposed by SEC on share prices is not the healthiest move and should have done only for the shares that were in question.

SEC last week imposed trading halts on shares such as Touchwood, BPL, Dankotuwa and Environmental resources which it thought was moving up in prices owing to speculations.

Stock analysts say the investors who has purchased shares at a higher price and added "day traders" who buys and sells during the same day might have got impacted.

However they say foreign investors were safe out of this situation as they did not buy speculative shares.

Research Head of Asia Securities Sanjitha Rajasekeran said that institutional and foreign investors invested their money in fundamentally strong stocks with a medium term perspective.

Another analyst said "Lot of foreigners takes a 3 to 5 year view when putting their money in CSE stocks".

source - www.dailymirror.lk