By Hiran H.Senewiratne
The CSE closed 26 minutes before its official ending time yesterday after the S&P SL20 index plunged more than 5 per cent, led by stock market heavyweights, stock market analysts said.
The main reason for the plunge was because two major index- weighted companies, namely, Expolanka Holdings and Lanka IOC, witnessed heavy profit- takings.
Meanwhile, two major global banks, Swiss Bank in Switzerland and Deutsche Bank AG, a German multinational investment bank and financial services company, are facing a risk of collapsing, which is known as “Credit Suisse Risk”. Market analysts predict something worse than the 2008 global recession. There the trigger factor was the “Layman Brothers” issue, stock market analysts said.
Apart from that, the UK economy is also going through a major crisis. Its new Prime Minister Liz Truss has reversed a widely criticized plan to abolish the 45 per cent top rate of income tax following a backlash from her own Conservative Party.
UK media reported yesterday morning that mere hours after insisting that the plan would go ahead, Truss had conceded that it could not go through the House of Commons.
Expolanka, being a company which has a significant presence in Europe and USA, consequently, created some panic among investors. They were worried that the issues in Europe would badly impact Expolanka’s business. As a result, heavy profit- takings were witnessed in Expolanka Holdings and its share price plummeted by Rs 20.25 or more than nine per cent. Its share price dropped to Rs 197.25 from Rs 217.50 at the end of the day.
Lanka IOC also witnessed some profit- takings due to the government reducing the fuel price by Rs 20. Still, Lanka IOC has profits because they are selling at a high range when the global fuel prices are declining, stock analysts observed.
The CSE said in a statement that the market had been halted due to the S&P SL20 index dropping over 5 per cent from the previous close, in keeping with the SEC (Securities and Exchange Commission) directive dated April 30, 2020. Accordingly, the market had been halted for the rest of the day.
Amid those developments CSE heavyweight Expolanka fell 9.3 per cent, while Lanka IOC slipped 5.2 per cent, leading the index fall. The main All- Share Price Index (ASPI) fell 3.8 percent or 281 points, while the more liquid S&P SL20 dropped 4.9 per cent or 156.0 points when the market halted.
The turnover stood at Rs 2.5 billion without a single crossing/arranged transactions. In the retail market top seven companies that were mainly contributed to the turnover were, Lanka IOC Rs 570 million (two million shares traded), Expolanka Holdings Rs 503.2 million (2.5 million shares traded), ACL Cables Rs 115 million (1.1 million shares traded), Royal Ceramic Rs 105.7 million (2.7 million shares traded), Chevron Lubricants Rs 92.6 million (840,000 shares traded), Browns Investments Rs 77.6 million (10.5 million shares traded) and Lanka Wall Tiles Rs 65.5 million (814,000 shares traded). During the day 125 million share volumes changed hands in 29000 transactions.
The CSE is enjoying a record net foreign inflow. In September net foreign buying was Rs. 14.7 billion, propelling the year to date figure to Rs. 15.2 billion. This is largely on account of parent SG Holdings buying into Sri Lanka’s number one listed entity Expolanka Holdings PLC.
Last year the net foreign outflow was Rs. 53 billion and in the preceding three years the outflow was Rs. 51 billion, Rs. 11.7 billion and Rs. 23 billion respectively. The previous net inflow was in 2017 at Rs. 17.6 billion.
Yesterday, the Central Bank- announced the US dollar buying rate was Rs 399.16 and selling rate Rs 369.91.
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