Colombo bourse chugs along the same route – analysts say
View(s):Share price trends have been on the lower side for several weeks since a new administration emerged with analysts attributing the downturn to a combination of reasons including uncertainty over impending polls and, as of this week, the approaching April season.
The Colombo bourse started the week on a slightly higher note on Monday’s early trade in another trading session marked by thin trade, but closed the week on a slump owing to investors opting to wait of a ‘clearer direction’, brokers said.
The momentous coalition between the country’s two main political parties, UNP and SLFP didn’t do much to uplift the listless sentiment in the Colombo bourse with the indices edging higher in early trades during the first three days and ending lower by day’s close. This pattern changed during Thursday when indices slumped right throughout.
During the week a common chorus by analysts was that traders opted to stay on the sidelines amid the developments in the political and economic fronts as the days dragged on. Brokers lamented that the index has fallen below 7,000 after nearly seven months. They added that activity levels weren’t high for the past few weeks, another reason why the market momentum isn’t picking up. “The retail and the high networth investors are waiting on the sidelines till the elections are over,” an analyst said, noting that both these segments are hardly investing based on fundamentals.
“This isn’t the case with foreigners,” he said, noting that this is why they have been net buyers for the most part of this year. A broker added that the market will ‘chug along’
in the same mode till April end. “This has much to do with the lack of direction and the holiday season,” he said.
On Friday, Colombo shares showed early gains with media reports of President Maithripala Sirisena promising the Chinese government that Sri Lanka intends to resume the contentious port project after problems are “sorted” out, only to fall at the close.
“This was a sore point in the share market, where questions were being raised about Sri Lanka halting the US$1.4 billion port city project, which was damaging ties with China. Many investors were questioning this move which impacted the market negatively in the past months,” an analyst said. He said that suspending this project would deter foreign investors.
But the market shed returns on Friday for the fifth consecutive session amid the uncertainties in the government policies which continued to affect the market sentiments, analysts said.