The Colombo bourse landed in the green territory yesterday in expectation of a relaxation on the broker-credit stance maintained by the Securities and Exchange Commission of Sri Lanka (SEC).
The brokers have been appealing to the market regulator to remove T+5 rule which has caused forced selling in the market, resulting in many local individual investors with less than Rs.1 million portfolios to exit and look for alternative investments.
Furthermore, Colombo Stock Brokers Association in a letter to the SEC pointed out that from January first to end of July, there had been a net foreign outflow of Rs.34.6 billion and IPOs (Initial Public Offers) and rights issues have absorbed over Rs.50 billion in the market.
According to brokers, since brokers have been barred to provide margins for their clients, the share prices have been plunging, which they attribute to forced- selling.
“Each market day has become a T+5 forced selling day for all Stock Broking firms which has led to a large number of clients’ shares been forced to sell daily on to the buying quotations, which in turn is moving lower and lower, and thereby precipitating a continues drop in the market prices,” the letter noted. As a remedy, the brokers requested the SEC to allow them to provide credit to clients at least up to their net-capital.
According to Lanka Securities, a volatile trading day prevailed in the Colombo stock market yesterday.
“The market recorded heavy losses in early trading and recovered successfully in the latter part of the day to end green,” the brokering firm said.
ASI gained by 55.68 points (+0.82%) to end at 6,806.97 while liquid MPI increased by 45.78 points (+0.74%) to close at 6,198.01.The market turnover stood at Rs.1.77 billion.
Ceylon Grain Elevators Plc (Rs.380.8mn) emerged as the top contributor to the turnover with heavy trading along with Bairaha Farms Plc (Rs.68.9mn) and Guardian Capital Partners Plc (Rs.67.4mn). In the meantime Three Acre Farms Plc, Citizen Development Bank Plc and Vallibel One Plc displayed active trading.
Foreign participation amounted to 5.0% of the total market activity. At the end of the day foreign investors were the net sellers with a net foreign outflow of Rs.15.1mn.
Pathirage buys 1mn more
Ashok Pathirage, Managing Director and Chairman of Softlogic Holdings yesterday bought 1 million shares of his own company, each at Rs.23, continuing the trend he set since the first trading day of the Softlogic IPO.
Although the share was offered at Rs.29 to the public, the share opened at Rs.25. Since then the share hasn’t picked up as expected.
“I know the value of my shares and know it’s unable to buy them at these prices from the market in two years time. So I’m buying them now” Pathirage said responding to an inquiry made by Mirror Business on his strategy earlier.
source - www.dailymirror.lk
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