CSE sees a volatile week

The Colombo Stock Exchange saw a volatile week with many small cap stocks moving widely while the indices traded within a narrow band. The week saw the broader market index, the ASPI, gain 1% to close at 3,808. The MPI, which tracks the 25 most liquid stocks of the CSE gained marginally to end 4,355. Turnover for the week was Rs 4.8 billion with a daily average turnover of Rs 1.1 billion in a week that saw 4.5 days of trading. The week saw net foreign selling again with sales exceeding purchases by Rs 289 million. Foreign inflow for the week was Rs 388 million while outflow was Rs 677 million.
Ceylon Tea Brokers which concluded its IPO on the 16th of February announced the basis of allocation. The application is to be filled on the basis of 33% of the 14 million share issue to be allocated on a preferential basis for which application for 30,000 shares and below are to be allocated in full, while applications from 30,001 to 1,000,000 are to be allocated on the basis of 30,000 shares plus 25% of the balance application up to 1,000,000. Thus an application for 50,000 shares would be filled at 35,000 shares. All applications over 1 million shares would have an 242, 500 shares on the basis of the above calculation plus 16.29% shares over and above the 1 million mark. The balance 67% is to be allocated on a non preferential basis. The basis for this is that all applications up to 5,000 be allocated 1,000 shares and above 5,000 shares to be allocated on the basis of 1,000 shares plus 5% for any amount over the 5,000 point.
Ceylon Hotels announced the sale of its property in Bambalapitya for a net consideration of Rs 188 million, earning its shareholders Rs 1.1 per share in additional revenue. The land had its office from the days when the company was a state owned enterprise. Since its privatization the company has been owned and managed by the Gardiner group which also owns the Galle Face Hotel. Galle Face Hotel is unlisted. Ceylon Hotels shares closed the week at Rs 24.24 after hitting a week high of Rs 26.00
Pan Asia Bank announced plans to raise Rs 369 million by way of a one (1) for three (3) rights issue. The bank is raising funds to meet Central Bank reserve requirements. Pan Asia Bank shares closed at Rs 22.00 unchanged from the previous week.
The week also saw the International Monetary Fund (IMF) stating that it was delaying the 3rd tranche of the standby facility due to fiscal targets not being met. The government has been on a spending spree during the past four months due to the Presidential elections being called before time and the general elections to be held in April. The Washington based institute which bails out countries facing balance of payments crises does not expect a deterioration of Sri Lanka’s foreign reserve position due to the stabilization of the past few months. The country has issued bonds to foreign investors and also bought foreign exchange in the market to stabilize the reserves of the country. This may have an impact on the stock exchange markets as foreign investors do not like fiscal instability and may pull out of the CSE in coming months if they do not see an improvement in government’s spending policies.
- Stock Market Correspondent