On share market and comments by Ravi Abeysuriya
View(s):Letter
I refer to Mr Ravi Abeysuriya’s article in the Business Times dated January 6 and headlined “Do’s” and ‘don’t’s” for brokers and state-owned funds in 2013” and your editorial in the same issue.
The same Mr. Abeysuriya said the market was a gold mine (reported in the newspaper) when the market was at its peak.
Later, when the market crashed he said he had sold most of his foreign holdings when the market was at its peak.
Can you explain the serious discrepancy in the statements made by the same person at different times? Do such people have any moral right to speak about ethics?
M. Azeez
Financial Consultant
Ravi Abeysuriya says: “Please allow me to explain, Heraymila (my company) said in a research report distributed to our clients and the media on 4th November 2010 that we consider the Sri Lanka equity market to be quite expensive and appears to be fully priced and is poised for a correction. At that time the market PE was over 25 times. Our clients who had invested since 2005 and heeded our advice exited the Colombo Stock Market in the later part of 2010 and relished a gain of over 30 percent annual return. This is what I said.
The article “Is CSE blood bath or gold mine? was published on 9th September 2011 in the Daily Mirror is self explanatory, where I am quoted saying “In the medium to long term, I see CSE will be a “Gold Mine” as Sri Lanka will sustain a high economic growth and companies will continue to report robust results and have growth in earnings, gradually bringing down our valuations to more realistic levels” and explains the key drivers the premise is based on. Please note medium to long term means at least a 5-year horizon. As explained by the Central Bank Governor in his presentation “Sri Lanka Roadmap 2013, Sri Lanka is aspiring to become a 100 billion US dollar economy by 2016 and my points are still valid.
Whether the CSE will be a gold mine or not for an individual investor will depend on his or her risk tolerances and circumstances such as the time horizon of the investments. Which will dictate whether equity investments are suitable for you and if so which stocks should be selected i.e. if you had invested in fundamentally strong stocks such as John Keells in September 2011 you will still have a small return today.
Hence there is no discrepancy in my statements as you have mentioned, as our clients sold out in end 2010 long before the market peaked in February 2011 and the article was published in September 2011 and the facts are still valid today for any medium to long term investor.
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