CSE up on impending return of EPF funds
View(s):The Colombo Stock Exchange (CSE) has witnessed an upsurge during the past week owing to the positive sentiment on the impending return of Employee Provident Fund (EPF) funds into the market, analysts say.
“The market is up though on low turnover due to EPF funds slated to come in. The decision has been made as a result of an agreement reached with the Asian Development Bank (ADB). They are already in the secondary bond market. We hope to see them in the equity market by the end of this year. This general sentiment has seen the market indices go up,” an analyst told the business times.
The Government signed an agreement with the ADB in 2016 and as per article 14 of that agreement, the ADB and a US company provided a white paper to facilitate the funds of the EPF to be invested in the CSE.
But all is not rosy. Some analysts say that the pathetic growth rate in the country isn’t helping foreign investors to stay. “There is a lot of foreign selling pressure in blue chips such as Commercial Bank and John Keells Holdings,” the analyst said.
He said the impending federal rate hikes in the US has led to foreign selling. “We see that closer to the federal rate hike there is a lot of foreign selling. After that the selling slows.”
A stockbroker noted that the Sri Lankan rupee has depreciated 5.5 per cent this year. The Indian rupee has depreciated 12 per cent for this year while the Pakistan Rupee has also depreciated slightly over 12 per cent. These reasons also have kept investors away from frontier markets.
“All these have impacted the CSE. The turnover levels have been on record lows during the past couple of months at Rs. 200 million to Rs.300 million.”
But at the same time the valuations are attractive. The Colombo bourse’s valuations at present mirror those in 2009.
This may be why a spate of high net worth individuals over the past couple of weeks was buying blue chips.
Business tycoon Harry Jayawardena has been collecting John Keell’s holdings stocks while Softlogic Group Chairman Ashok Pathirage was seen collecting NDB stocks over the past week.
Meanwhile businessman Nimal Perera has been buying Asian Hotels and Properties Ltd stock during the past few weeks as well.
(DEC)