Stock market likened to a casino
While stock prices soared on the Colombo bourse last week, an equities analyst warned that there were serious underlying problems that can bring the whole market down.

"Internal ethical issues, insider dealing, front running and kick backs, crowd the market," Amal Sanderatne, the CEO of Frontier Research, said.

"We will soon see the repercussions of the lack self-regulation among participants," he told a seminar conducted by the Sri Lanka Economic Association. "This pattern cannot be sustained. The equity market is like a casino and has got worse."

Sanderatne said he takes a more cautious view of the market. "Our equity market does not have the human capital resources to meet the rest of the conditions of the Regaining Sri Lanka document. There is a shortage of qualified people, and investing in human capital is absolutely critical."

Sanderatne also said, "The advice given to the investors is of poor quality which has resulted in speculative investment decisions." He said he strongly believed that during the past 10 -15 years the level professionalism has lost its mark in the equity market.

"Nothing much is being done to develop the equity market" he said adding that the amount spent on research is less than five percent. "The Sri Lankan equity market being a hub in this region may not be possible anytime soon," he added.
The Colombo Stock Exchange announced the All Share Price Index (ASPI) passed the 1,400-point level and reached its highest ever point on Thursday while the Milanka Price Index (MPI) crossed the 2,500-point level for the first time in its history.

The ASPI closed at 1,423.5 and the MPI closed at 2,568.8. The ASPI moved up by 35.4 points (2.5 percent) for the day and the MPI moved up by 91.0 points (3.6 percent), making it the first occasion when both indices reached an all-time high on the same day.

The Rs. 1.3 billion turnover on Thursday was the fourth highest daily turnover in the CSE's history. Total turnover so far for the whole year reached Rs. 60 billion. The average daily turnover of the CSE now stands at Rs 308.1 million compared with an average daily turnover of Rs 147 million in 1994.

The ASPI has recorded an unprecedented growth of 74.6 percent for the year, making the CSE one of the best performing stock markets in the world. This is the highest growth of the ASPI for a given year, surpassing the 61 percent growth recorded in 1993. The MPI has recorded a growth of 86.8 percent for the year.


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