News
Struggling CSE recovers amidst heavy sell-off
The Colombo Stock Exchange (CSE) this week saw Rs. 61.7 billion worth of share value being wiped out after prices crashed on Monday and were subdued over the rest of the week, after trading resumed for the first time in seven weeks of a shutdown.
Adding to the woes foreign investors complained that the market should have been operated online like many other exchanges in the world, instead of being closed for seven weeks,
Brokers said some investors hoped the CSE learnt its lesson last Monday when share prices fell by 10 per cent which forced the exchange to shut trading just 38 seconds after opening, as per new regulations where trading is closed for the day when the benchmark S&P index falls by 10 per cent.
Tuesday saw the trading halt kick in after nine minutes of opening trades when the S&P index crashed by 5 per cent but after a 30 minute cooling period, trading resumed. That day the turnover was Rs. 3.64 billion with 193.3 million shares traded.
Investors and brokers got a breather on Wednesday when share prices gained driven up mainly by Sampath Bank and retail stocks such as Access Engineering and Textured Jersey. Foreign investors recorded a net outflow of Rs.329.5 million on that day, which was 68 per cent of the turnover, against the net outflow of Rs.114.3 million recorded on Tuesday. Wednesday also saw deals on Commercial Bank which boosted the turnover to Rs. 3.7 billion. The bank also saw 6 per cent of its voting stake traded for Rs. 2.93 billion.
Thursday saw the CSE ending mixed and the same day saw the Securities and Exchange Commission (SEC) Chairman Viraj Dayaratne and his team along with CSE officials form a joint committee for damage control and to restore some order.
Analysts said next week will see a round of renewed selling and may see strategic stakes trade hands but the market is unlikely to repeat Monday’s crash in share prices.