Despite fervent expectations by the industry that 2012 will be a ‘party’ for the share market with changes at the Securities and Exchange Commission (SEC) directorate, some analysts say the market this year will not be as good as expected despite the impending relaxation on certain rules by the regulator.
Brokers expect the systematic credit control tightening over the past year to be relaxed by the new Chairperson, Thilak Karunaratna (going by his comments on overregulation in the market). “We are also awaiting a meeting with the Colombo Stock Exchange (CSE) and the SEC,” a broker told the Business Times, adding that they’ll lobby to get the current directives by the SEC changed.
Many agreed 2011 was a year of lessons learnt and also noted that relaxing credit rules won’t be a panacea for all ills. “This won’t dramatically push the market up and for it to be sustainable on an upward trend, we need foreign investment,” an analyst stressed.
“The ‘games’ that were played last year at the CSE will not be easy this year,” another analyst warned. He added that ‘lessons’ have been learnt by all stakeholders in the market.
Analysts say that with the strong earnings outlook - the 20% increase in expected credit growth, average gross non-performing loan ratio of about 4.5%, healthy capitalization levels, return of equity of nearly 18% -, the banking sector outlook for this year remains positive.
“Given the negative market sentiment the banking sector counters have shed ground during the last few months.
However at these price levels the sector is very attractive,” Dhanushka Samarasinghe, Director Research TKS Holdings, said.
He said the tax holiday granted for tourism investments till 31st of March 2015 exceeding Rs 50 million under the Inland Revenue Act will give a large boost to conglomerates in this sector.
"Listed entities such as Aitken Spence Hotel Holdings, John Keels Hotels, Softlogic Holdings, etc would benefit from this tax holiday," he added.
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