Thursday, April 5, 2012

Melstacorp enters COMBank; CF Ruffer picks up more shares

Foreign investor CF Ruffer funds and Harry Jayawardena’s Melstacorp figured among buyers of Commercial Bank shares, which produced a Rs. 890 million turnover on  Tuesday.

Two funds of CF Ruffer had picked up a combined 3.7 million shares at Rs. 100 each.  By end of 2011, CF Ruffer held six million COMBank shares amounting to 0.78% stake.

Entry of Melstacorp into Commercial Bank is also interesting, according to analysts. The Distilleries subsidiary had bought 1.3 million shares of Commercial Bank for Rs. 130 million. The investment comes amidst the impending appointment of former Commercial Bank Managing Director Amitha Gooneratne as Melstacorp’s Managing Director.

 Analysts however described the acquisition and the appointment as having no links and it was part of what appears to be an aggressive expansion of Melstacorp’s portfolio investment activity.

 Melstacorp’s major investment of late had been in to premier blue chip JKH.  Melstacorp is being developed as the holding company of Distilleries’ unlisted subsidiaries as well as major recent investments.

 Another local institutional investor had picked up 3.7 million shares of COMBank too.

 The major seller of COMBank on Wednesday was Indra Silva, shedding around 7.5 million shares. By end 2011 he was the largest individual shareholder at COMBank with 24 million shares or a 3% stake.

 Foreign buying into COMBank as well as JKH and CTC among others has ensured net foreign inflow. On Wednesday it was Rs. 375 million, whilst yesterday it amounted to Rs. 241.4 million, bringing the year-to-date total close to Rs. 21 billion.

 Despite a bullish outlook by foreigners, the Colombo Bourse continues with its struggle, largely due to the absence of local investors out of pessimism. The boost from IMF support hasn’t improved confidence of local investors.

 Analysts said the rise in deposit rates had seen investors shift to banks from the stock market. The other concern is the impact on corporate earnings, following the spike in costs and dimmer outlook caused by upward revision in energy prices.

 The day’s turnover was Rs. 1.13 billion. The Colombo Bourse is one of the worst performers this year among Asian markets, with an 11% loss year-to-date.

source - www.ft.lk

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