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Monday, July 4, 2011

Value of IPOs up 179% in 1H 2011

*Together with rights issues total capital raised Rs. 27.5bn

*Lack of new funds, forced selling due to regulatory requirements holding indices down

July 3, 2011, 8:13 pm

The Colombo Stock Exchange could not repeat its impressive performance of a year ago with the All Share Price Index recording a marginal 2.9 percent year-to-date growth as at June 30, 2011 which corresponded to a 10.8 percent decline from a year earlier while the Milanka Price Index grew 48 percent year-to-date, and a slower 19.4 percent year-on-year growth rate.

By last Friday (1), the All Share Price Index gained 3.15 percent year-to-date while the Milanka Price Index of more liquid stocks declined 10.15 percent. Turnover which averaged 2.3 billion a year ago was averaging Rs. 2.8 billion during the first six months of this year.

Brokers said IPOs (initial public offerings) have raised Rs. 12 billion during the first six months of this year, up 179 percent from Rs. 4.3 billion in 2010, while the numerous rights issue generated Rs. 15.5 billion, excluding the Commercial Bank and Hatton National Bank rights issues.

Termed as a den of gamblers by some sceptics, the CSE was dominated by local investors with selling pressure dragging the indices lower.

"The market witnessed bearish sentiments within the week’s trading session. The ASPI commenced the week on a flat note with interest seen on speculative counters. The rest of the week continued on dull sentiments with the market edging up mid-week with institutional participation picking up," Bartleet Mallory Stockbrokers (BMS) said.

It said the ASPI lost 47.85 points, down 0.69 percent, during the week while the MPI fell 1.47 percent, down 94.87 points. Foreigners were net sellers during the week amounting to Rs. 1.01 billion.

"Last week we saw some unexciting sentiment, with selective interest on certain counters. We can expect this to continue, with buying seen in counters that are backed by healthy financials. The lack of new funds coupled with forced selling due to regulatory requirements is holding the indices down," BMS said.

The Securities and Exchange control have imposed regulations limiting the amount of credit brokers could extend to their clients, except through margin trading.

source - www.island.lk