brand logo

Market boom disrupted by S&P SL20 decline

03 Feb 2021

Constant record-breaking performance achieved by the Colombo Stock Exchange (CSE) in the recent past was interrupted yesterday (2) after the S&P SL20 index, which includes the 20 largest and most liquid stocks in the country, declined by over 7.7% from the previous close. With the decline being above 5%, the regular trading was halted for 30 minutes each on two occasions during the day based on the three-tiered circuit breaker structure CSE introduced last year. Under the structure’s first circuit breaker, the trading will be automatically halted for 30 minutes when the S&P SL20 index drops by 5%. Under the second circuit breaker, if the index drops by a further 2.5% after recommencing the trading following a period of 30 minutes due to being declined by 5% on the same day, another market halt of 30 minutes will be imposed automatically. Finally, under the third circuit breaker, after recommencing trading after two cooling off periods of 30 minutes following the S&P SL20 drop of 2.5%, by which point S&P SL20 has dropped by 7.5% for the day, if the index declines further by 2.5%, trading will be halted and the market will be closed for the day. The decline of the index comes amidst CSE being recognised as the best performing stock exchange in the world last month by Bloomberg. It should also be noted that a day prior to being subjected to trading halts due to decline in S&P SL20 index, CSE recorded a 13-year high turnover of Rs. 23.7 billion. Furthermore, the benchmark All Share Price Index (ASPI) crossed 7,000 points on 6 January this year for the first time since 24 November 2015, closing the trading day at 7,036.76 points. The ASPI crossed the 7,000 mark for the first time on 1 October 2010 and reached its highest points level, recording 7,811.80 points on 14 February 2011. In addition to this, CSE recorded two significant milestones on 13 January with the market capitalisation reaching an all-time high value of Rs. 3.25 trillion and recording 52,559 trades, which is the highest number of trades recorded within a market day. The number of trades carried out on that day surpassed the previous record of 49,921 carried out on 18 August 2011. Meanwhile, days after, ASPI broke its own records as it reached its all-time high index tally on 18 January, closing the 10th trading day of 2021 at 7922.66 points. The previous highest points figure recorded was 7811.80 points on 14 February 2011. The ASPI gained 188.09 points on this day, recording the eighth highest points gain in CSE’s 35-year history. Meanwhile, the ASPI had its biggest single day drop yesterday as it dropped 561.75 points to close at 8,005.32 points.


More News..