Thin turnover at Colombo bourse with foreigners on the sidelines
View(s):Low turnover levels at the Colombo stock market in the past few months was mainly due to foreign investors being on the sidelines, industry officials say.
This is mostly owing to the impending general elections and investors fretting over the evolving uncertainties in the political front and the entire political setting in the country, they say. “But foreigners haven’t left the market” an industry official said, adding that they may be trimming positions in key blue chips. Many still feel that foreigners are holding onto their positions as they feel that Colombo is trading below multiples or at a discount.
Daily market turnover reached a near one-month high of Rs 2 billion on March 25 underpinned by hefty crossings recorded in Odel where 66 million shares were transacted at Rs. 22 per share. The crossings contributed to 72 per cent of the market turnover. Odel topped the turnover list with Rs. 1.4 billion. A day before this, foreign investors turned net sellers snapping the 14-day buying streak when they sold Rs. 8 million worth of shares and the foreign participation was 11 per cent. A day later foreign participation was low at 3 per cent which was the lowest participation since 24th December 2014. At the start of this month on Wednesday, foreigners became net buyers with a net inflow of Rs. 73 million ending the selling streak of seven consecutive sessions.
Analysts said that thin trade is also owing to major political decisions of the new regime. “Some investors reacted to the government’s decision to withdraw the US$85 million airport runway contract awarded to Access Engineering and the selling pressure mounted,” an analyst said.
During March, foreign investors bought Rs 1.4 billion worth of equities with a participation of 27 per cent.