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CSE Chairman Ray Abeywardena[/caption]
By Charindra Chandrasena
Ahead of the long-awaited resumption of trading at the Colombo Stock Exchange (CSE) after a seven-week closure today (11), CSE Chairman Ray Abeywardena said he believes there is considerable value in the market for the long-term investor.
“We are virtually going into the unknown because we are trading for the first time after 20 March. However, there is tremendous value, and for investors who are thinking long term, there is no better time than now to invest. In fact, an investor told me that this is a once-in-a-century buying opportunity,” he told The Morning Business yesterday evening (10).
The curfew imposed in the evening on 20 March has made the CSE the stock market that has been closed for the longest period in the region due to Covid-19. In fact, only the Dhaka Stock Exchange in Bangladesh has been closed for a somewhat similar period, having shut its doors on 29 March. Despite many countries around the world being in a state of lockdown or curfew, the stock exchanges of these countries have generally been open for trading.
Abeywardena also called on investors and stockbrokers to rely on fundamental analysis and not be driven by sentiment alone, with Sri Lanka surpassing 850 cases of Covid-19 yesterday and the economy being under severe strain as a result of containment measures.
“At these prices, if somebody looks at the fundamentals there is a lot of value. You have to go on the fundamentals, not on the sentiment. For those who have holding power, this is an excellent time to get into the market,” he said.
Our sources indicated that foreign investors are waiting anxiously to pull out of the market at the first opportunity and there is considerable selling pressure that has been accumulated over the past seven weeks. Therefore, it is widely expected that there will be a significant net foreign outflow today.
When asked about a potentially large sell-off, Abeywardena struck an optimistic note.
“When some say the glass is half empty, I say it is half full. We as a nation have faced bigger challenges in our history and demonstrated resilience. Therefore, we must be positive. There might be a bit of selling as well but we are confident that at some point in time, the buying will come in to support the market,” he said.
In the days leading up to the initial closure of the CSE, on 16 March, the CSE’s circuit breaker was activated multiple times after the Standard and Poor’s Sri Lanka 20 (S&P SL20) index, which includes the 20 largest companies by total market capitalisation listed on the CSE, fell by 5% slabs several times, triggering 30-minute halts in regular trading.
The following week, it remained closed for four days with the Government declaring holidays, before being opened on Friday, 20 March. On that day, the S&P SL20 dropped by 11.72%, despite trading for less than half the usual period. The CSE suffered a net foreign outflow worth a staggering Rs. 473 million in these five-and-a-half days.
However, the CSE will have two safeguards in place to minimise the damage when it opens today. Firstly, there will be a significantly shortened trading period. The pre-open session will be from 10.30 to 11 a.m., the open auction will take place at 11 a.m., and regular trading will commence after the open auction at 11 a.m before the market closes at 1 p.m.
Secondly, the CSE will debut a new circuit breaker system which is set to stop the expected hemorrhaging if it gets out of hand. The Securities and Exchange Commission of Sri Lanka (SEC), which regulates the CSE, on 30 April, introduced a new system under which the market will automatically close for the day if the S&P SL20 drops by 10% or more.
CSE Chairman Ray Abeywardena[/caption]
By Charindra Chandrasena
Ahead of the long-awaited resumption of trading at the Colombo Stock Exchange (CSE) after a seven-week closure today (11), CSE Chairman Ray Abeywardena said he believes there is considerable value in the market for the long-term investor.
“We are virtually going into the unknown because we are trading for the first time after 20 March. However, there is tremendous value, and for investors who are thinking long term, there is no better time than now to invest. In fact, an investor told me that this is a once-in-a-century buying opportunity,” he told The Morning Business yesterday evening (10).
The curfew imposed in the evening on 20 March has made the CSE the stock market that has been closed for the longest period in the region due to Covid-19. In fact, only the Dhaka Stock Exchange in Bangladesh has been closed for a somewhat similar period, having shut its doors on 29 March. Despite many countries around the world being in a state of lockdown or curfew, the stock exchanges of these countries have generally been open for trading.
Abeywardena also called on investors and stockbrokers to rely on fundamental analysis and not be driven by sentiment alone, with Sri Lanka surpassing 850 cases of Covid-19 yesterday and the economy being under severe strain as a result of containment measures.
“At these prices, if somebody looks at the fundamentals there is a lot of value. You have to go on the fundamentals, not on the sentiment. For those who have holding power, this is an excellent time to get into the market,” he said.
Our sources indicated that foreign investors are waiting anxiously to pull out of the market at the first opportunity and there is considerable selling pressure that has been accumulated over the past seven weeks. Therefore, it is widely expected that there will be a significant net foreign outflow today.
When asked about a potentially large sell-off, Abeywardena struck an optimistic note.
“When some say the glass is half empty, I say it is half full. We as a nation have faced bigger challenges in our history and demonstrated resilience. Therefore, we must be positive. There might be a bit of selling as well but we are confident that at some point in time, the buying will come in to support the market,” he said.
In the days leading up to the initial closure of the CSE, on 16 March, the CSE’s circuit breaker was activated multiple times after the Standard and Poor’s Sri Lanka 20 (S&P SL20) index, which includes the 20 largest companies by total market capitalisation listed on the CSE, fell by 5% slabs several times, triggering 30-minute halts in regular trading.
The following week, it remained closed for four days with the Government declaring holidays, before being opened on Friday, 20 March. On that day, the S&P SL20 dropped by 11.72%, despite trading for less than half the usual period. The CSE suffered a net foreign outflow worth a staggering Rs. 473 million in these five-and-a-half days.
However, the CSE will have two safeguards in place to minimise the damage when it opens today. Firstly, there will be a significantly shortened trading period. The pre-open session will be from 10.30 to 11 a.m., the open auction will take place at 11 a.m., and regular trading will commence after the open auction at 11 a.m before the market closes at 1 p.m.
Secondly, the CSE will debut a new circuit breaker system which is set to stop the expected hemorrhaging if it gets out of hand. The Securities and Exchange Commission of Sri Lanka (SEC), which regulates the CSE, on 30 April, introduced a new system under which the market will automatically close for the day if the S&P SL20 drops by 10% or more.