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Colombo share market gallops to all time highs

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The Colombo Stock Exchange (CSE) galloped last week with the benchmark All Share Price Index (ASPI) hitting an all time high on Monday and improving on that performance on subsequent trading days to close the week at 8,463 points on Friday. The more liquid S&P Index that normally trails the ASPI also gained sharply though less so than the benchmark index.

Brokers and analysts attributed the surge to prevailing low interest rates and said that people holding funds in fixed interest instruments have seen greater potential in the stock market and have so far not been proved wrong.

“Take the case of vehicle importers,” said one businessman. “With imports disallowed, cash that would have been once used to replenish inventory becomes available for investment elsewhere. The stock market is a magnet for such funds.”

Also, many companies have resorted to a share split strategy to make their shares both more liquid and more affordable on the market.

“Take the example of a fifty-rupee share split into two. Theoretically, it should then trade at Rs. 25 a share after the split. But often it does better than that at no cost to the company that had split the share because its stated capital remains what it was,” explained and analyst.

“It’s different in the case of bonus shares or scrip issues as they are called where reserves are capitalized to pay for the new shares priced at realistic values.”

Last week the Hayleys conglomerate announced share splits in over a dozen group companies. These ranged from each share being split into ten in the parent company (Hayleys) and thriving subsidiaries like Haycarb and Dipped Products while other companies like Kingsbury split a share into two.

Brokers and analysts said that the current market surge was largely driven by the Dhammika Perera controlled Hayleys and the Ishara Nanayakkara controlled LOLC groups.

Last week Hayleys announced over a dozen share splits including in its recently acquired Singer Group companies. The majority of these involved dividing each share into two though at Singer Sri Lanka each share will be split into three.

The biggest share split ever proposed is one that is pending at EB Creasy (EBC) where each share is to be split into 100. The seldom traded EBC share is quoted at the top end of the CSE sharelist. Analysts said the massive split is intended to pump liquidity into the share and make it more affordable.

“There’s a lot of retail play in the market right now with new investors who recently took some risk doing very nicely in this bull run,” a broker said.

The CSE hit rock bottom after a seven-week closure in March last year.

 

 



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President Ranil Wickremasinghe calls upon chief prelates of Asgiriya and Malwatta chapters

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(pic courtsey Divaina)

President Ranil Wickremasinghe called upon the chief prelates of the Asgiriya and Malwatta chapters on Thursday (02) morning to seek their blessings ahead of the 75th Independence day celebrations.

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US secures deal on bases to complete arc around China

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US Defense Secretary Lloyd Austin (R) was in the Philippines to finalise the deal (picture BBC)

BBC reported that the United States has secured access to four additional military bases in the Philippines – a key bit of real estate which would offer a front seat to monitor the Chinese in the South China Sea and around Taiwan.

With this deal, Washington has stitched the gap in the arc of US alliances stretching from South Korea and Japan in the north to Australia in the south.

The missing link had been the Philippines, which borders two of the biggest potential flashpoints, Taiwan and the South China Sea, or the West Philippine Sea as Manila insists on calling it.

The US already had limited access to five sites under the Enhanced Defense Cooperation Agreement (EDCA) – the new additions and expanded access, according to a statement from Washington, will “allow more rapid support for humanitarian and climate-related disasters in the Philippines, and respond to other shared challenges”, likely a veiled reference to countering China in the region.

The statement came after Defence Secretary Lloyd Austin met Philippine President Ferdinand “Bongbong” Marcos Jr in Manila on Thursday.

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Nuland accuses China of failing to help SL with ‘credible and specific assurances’ acceptable to IMF

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Nuland addressing the media in Colombo (pic by Thushara Atapattu)

US hopes LG polls will be held in March

By Saman Indrajith

US Under Secretary of State for Political Affairs, Victoria Nuland, yesterday said China had not provided credible and specific assurances to the International Monetary Fund (IMF) for Sri Lanka to overcome the current economic crisis.

Addressing the media in Colombo, Nuland said: “What China has offered so far is not enough. We need to see credible and specific assurances that they will meet the IMF standard of debt relief. We, the United States, are prepared to do our part. Our Paris Club partners are prepared to do their part. India has made strong commitments that it will provide the credible assurances the IMF is looking for.”

Nuland said that India and the Paris Club had given strong assurances to the IMF to help Sri Lanka to obtain a $2.9 billion bailout.

“We want to see an IMF program as quickly as possible. That is what Sri Lanka deserves; that is what Sri Lanka needs,” Nuland said.

Nuland said the US would give Sri Lanka an additional USD 30 million to provide 96,000 schoolchildren with food.

She said Sri Lankans had taken to the streets, last year, demanding cleaner, accountable and inclusive governance, with transparency, and the government was expected to hold the elections to enable people to enjoy their democratic rights.

Nuland said that the US was glad to see that consultation between the government and other parties towards reconciliation had commenced. She said that she had met with members of the Tamil political parties, earlier yesterday. “We hope that the dialogue will continue to achieve real results such as return of the lands to their rightful owners.”

Nuland said that the US hoped that local elections would be held in March, the dialogue commenced for reconciliation would continue, and the Prevention of Terrorism Act would be reformed to meet international standards.

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