Business Times

Winning streak from Asia Asset Finance

Stockmarket Review
By Elton P. Ebert

A much welcome wave of enthusiasm engulfed the Colombo bourse from Wednesday after a spell of inexplicable depression. This flame was further ignited the next day with the debut of Asia Asset Finance which delivered substantial profits on day one to its ubscribers, not seen for more than a year.

Analysts were also juxtaposed as a result of the trading pattern of this stock which was not oversubscribed on day one itself unlike other IPOs and with the market sentiment not as good as before. A substantial 38.5 million shares were transacted on the first day, and continued to shock everyone the next day when it raced to Rs.6.30, in dealings of over 40 million shares - unbelievable for a share issued to the public at Rs.2.50!

As the week came to a close both indices were slightly discounted from the start of the day.
Directors of companies which postponed their IPO.s due to the unfavourable share market conditions may have heaved a sigh of relief because of this success. However any IPOs should be investor friendly with the reasonable pricing and the company should have a perfect track record.

Many are still smarting following the failure of erratically-priced IPOs like Softlogic Holdings and Expolanka, which are now langushing at very low levels. Softlogic issued 139 million shares at Rs 29 in June 2011 while Expolanka issued 172 million shares at Rs.14 in May 2011. Browns Investments, Free Lanka Capital Holdings, Textured Jersey, and People’s Leasing were also disappointing, but in this group the price disparity is not so great.

The diversified Richard Pieris has embarked into insurance through Arpico Insurance which is a joint venture with Ataraxia, an investment banking company in Australia, and in association with reinsurer Munich Re.

During the week Environmental Resources Investments’ normal shares and its warrants were heavily traded although with varied price movement, while Commercial Bank, Free Lanka Capital and Textured Jersey were also ingredients of the high turnover. On Friday a near three million shares in Marawila Resorts were transacted.Alliance Finance improved to Rs. 800, Associated Motor Finance gained to reach Rs.460 while Nuwara Eliya Hotels was at Rs 1350. But Colombo Pharmacy was static at Rs.1100.
Changes in directorates: Asia Asset Finance Ltd - Dayananda Muthukumarana resigned as Chairman and from the board, Manohara Nanayakkara was appointed Chairman, Nirosh de Silva was appointed a Non-Executive Independent Director and Ms D Priyanthi Pieris a Director; Peoples Merchant PLC - Tushan Wickramasinghe, G. Ramanan and Anil P Weerasinghe were appointed Directors.

Turnover for the week was much better at Rs.3.7 billion when compared to Rs.1.9 billion last week. Both indices ended fractionally lower than last week, the All Share Price Index losing just 1.18 points or 0.05% to end at 5929.34 while the Milanka was 37.06 points or 0.1% lower to close at 5046.09.

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