Stock market to reopen soon
View(s):The Colombo Stock Exchange (CSE) is expected to open sometime this month. It was unclear on Friday whether the Colombo district curfew due to end on Monday May 4 morning would be extended.
If it ends on Monday, the market is likely to resume trading on the same day.
The buzz of restarting operations at the stock market came about after a proposal in that regard was put forward to the Economic Revival Task Force last week. Industry sources noted that it will be taken up at the next meeting.
Concerns that certain stockbrokers had, like the settlement issues amidst curfew will be addressed, industry sources said.
Meanwhile issues of large foreign-exchange outflow and takeover of companies owing to their low share prices by investors and certain stronger companies are still lurking in the air.
Stock market analysts say that initially there will be a huge sell-out by both local and foreign investors when the market opens but that is to be expected as displayed in foreign markets. While some investors will be driven by fear, others will be driven by greed.
There will be a big liquidity crunch, but if the market does not open early, it will be in a worse place than where it left off when it eventually restarts operations, an analyst pointed out.
“So it is better to open the market as early as possible,” one analyst said.
Examples of emerging markets which have bounced back in the midst of the pandemic are Vietnam and South Korea.
In Vietnam, the benchmark VN Index rebounded 15 per cent in April, becoming the world’s best performer, data show. The South Korean benchmark Kospi stock index surged from March lows last week.
Both these markets show that foreign investors were leading the recovery ride.
The pandemic eventually will run its course and world stock markets and economies, will resume their growth trajectory. So, analysts point out, it’s better that Sri Lanka has a head start without pandering to the whims and fancies of certain stakeholders. (DEC)