CSE gearing to set more record highs
Stockbrokers said the Colombo stock market is posting record highs almost every week, and the index is slated to rise further based on fundamental valuations.
They noted that most trades now happen on fundamental valuations and not merely on speculation. They stated that there were many instances when the price-to-earnings ratio was moved to 15 times on positive sentiment. “It has the potential to reach more than 20 times because there are quality earnings from June to September. Most companies show encouraging growth,” a stockbroker told The Sunday Times Business on Thursday. A second stockbroker noted that most research departments in stockbroking houses are adding an upside to fundamentally valued counters.
Stock market analysts in Colombo added that going forward the Colombo bourse will see more high-net-worth individual activities and transactions of top corporate names.
In late October, Columb Stock Exchange, saw its turnover reach an 8-month high at Rs. 7 billion with transfers of Dr. T. Senthilverl’s strategic blocks 14 per cent of Harischandra Mills and 10.7 per cent of Swadeshi Industrial Works. In early December Dr. Senthilverl bought Agarapatana Plantations PLC and sold some Alumex PLC shares with over 15 million shares traded for Rs. 204 million. In mid-December, he divested his 6 per cent stake in Alumex PLC for Rs. 408 million. Buyers included Rayynor Silva, Aravinda de Silva and Ajith Devasurendra.
Analysts added that many people go for a higher market return in the Colombo Stock Exchange than in low-interest fixed-income securities amid high taxes. “Now there is growing confidence amongst market players that despite being centre left, the government, is embracing more market-driven policies. Also, they have handled the International Monetary Fund situation properly,” an analyst noted.
The short-term growth outlook in the country has been enhanced by faster-than-expected macroeconomic stabilisation but continued structural reforms are crucial for enhancing medium to long-term growth potential, economic analysts said.
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