“Stock market surge is quite significant,” says Ray

“It was speculated that a decisive end to the war would bring about a surge in the stock market. Whilst most markets throughout the world were taking a beating due to the global economic crisis, our exchange had hopes of there being a resurgence – and this is exactly how it turned out! The indices gained over 290 (ASPI) and nearly 450 (MPI) points in the first six days of trading after the end of hostilities,” says the Group CEO of Acuity Partners and Deputy Chairman of Acuity Stockbrokers Ray Abeywardena, in the August issue of leading business magazine LMD.
Commenting on the significance of this surge in the stock market, he affirms that this was “quite significant” since it was not only the indices that went up, but also turnover. “Turnover, which was lagging at around Rs. 100 to 200 million a day, shot up to Rs. 1.5 billion a day in the week that followed,” he notes.

As for what can be expected from the bourse over the medium term, he maintains that this has a lot to do with perceptions. “A trade of any kind takes place when one party sees value, either present or future. Growth in the national economy, a further decline in interest rates and a positive view of the future of a new Sri Lanka should see a steady rise. However, profit-taking along the way will see corrections to the indices in the next six months to one year,” he adds.
Touching on how the market has reacted to the collapse of several financial-services entities in this country, he says: “This has had an impact on share prices of listed companies that were either directly or indirectly related to the group in question. The bank in the group saw its share price take a battering before the Central Bank of Sri Lanka intervened in the management and operations of the financial institution, which had a stabilising influence. The confidence factor is crucial.”
Abeywardena observes that it is difficult to quantify the loss that the market suffered during the decades-old war in absolute monetary terms. “But we could have definitely positioned Sri Lanka as a financial hub and acted as a conduit for trade between our neighbours, had the situation been different,” he adds.
LMD, Living, THE LMD 50, Most Respected and the recently launched Brands Annual are publications of Media Services, which presents the weekly business programme BENCHMARK.