Interest rates likely to go up before elections.

Sstar wrote:During the month of November, December and January there is a huge demand for consumer goods which are mostly imports. This has been witnessed during festive season during April and December. This will have an impact on exchange rate and resultant inflation. These inflationary pressure coupled with government desire to win the heart of the voters before elections will likely to increase the interest rates.

These are my thoughts. I sold my portfolio but bought back few shares and hold them currently. Please don't mix up my analysis with my investment strategy. They are both mutually exclusive.

at this crucial stage, who would think about inflation?
electricity down
gas down
oil down
down down prices are down.... Would rates will be up? do you reckon?
I will tell you for sure, Salary will be up. As you said, there may be something for pensioners too

As shark Aka Tah said, Pensioners also will get encouraged to invest in Stock market.

Miracle of Asia my dear. This is about to happen, in front of our eyes.    

My salutes to oops because he said, "halo election wenakal yana tikak thama yanne.eeta passe hulan"

Sstar wrote:Interest rates are likely to go up during next 3 months due to government pressure to provide better deposit retuns to pensioners and others to get their vote. This would likely to have a short term increase in the interest and TB Rates. This will likely have a negative impact towards the stock market. 

Don't you think it's better to exit stocks prior to elections?

Agree. But I hope rather increasing interest rates, CB will look for special interest scheme for pensioners such like a deposit method which gives better % than normal banking deposit. CB keep reducing interest rates in order to increase private sector credit but still it hasn't worked well. Still it is difficult to obtain a loan from Banks when a normal person goes and ask for a loan.

Meya meyatai gang ekatai one ewa market karanne,api owata kagahanna one naaa

There is a strong likelihood that interest rates could go up for a short period. The budget will be a election propaganda manifesto aimed at recapturing the lost votes. President will speak of the economic growth we have achieved and sharing the benefits with the people by increasing salaries, reducing taxes on essential goods and increasing interest rates on short term deposits so that people will benefit.The recent fuel and power tariff reductions were also part of the propaganda. Stock market will anyway be slack during the festival season. After elections everything will be back to normal and our readers can get back to their trading activities.

During the election time Stock market prices may go

Most share holders think this govt is not investor friendly

and Ranil,s policies are more inverter friendly

But economic management of both parties are more or less same

Watching the Budget speech. Does PBJ know the difference between election budget or any budget for that matter. Ranil could grin and sit there forever.

Sstar wrote:During the month of November, December and January there is a huge demand for consumer goods which are mostly imports. This has been witnessed during festive season during April and December. This will have an impact on exchange rate and resultant inflation. These inflationary pressure coupled with government desire to win the heart of the voters before elections will likely to increase the interest rates.

These are my thoughts. I sold my portfolio but bought back few shares and hold them currently. Please don't mix up my analysis with my investment strategy. They are both mutually exclusive.

I guess my prediction about interest rate seems reasonable with the government promising high interest rates to pensioners. With all these election goodies there will be serious pressure on CEB to increase interest rates or remove the artificial control thru have on interest rates.
How many senior citizens are above 55 are in the CSE?

NC wrote:Samahara vita podi correction 1kuth danna bari kamakuth na...


This is a very valuable resourceful website. You can get any graphs relates with economics of any country... Hope will be helpful..
http://www.tradingeconomics.com/sri-lanka/indicators

Hithuwe corrcetion ekak ballinam impluse ekak....

NC wrote:

NC wrote:Samahara vita podi correction 1kuth danna bari kamakuth na...


This is a very valuable resourceful website. You can get any graphs relates with economics of any country... Hope will be helpful..
http://www.tradingeconomics.com/sri-lanka/indicators

Hithuwe corrcetion ekak ballinam impluse ekak....

NC

I am with interest rates day in & day out.The correction has already come by way of foreign selling in the Bond & Bill market and there may be bit of panic in monday only. Then things will ease out as there is enough buying pressure from other foreigners as well.

LIOC එක 50 ගහන්න ඔන්න මෙන්න කියල තියෙද්දී කෑවා...
කමක් නේ පොදු ජනතාව වෙනුවෙන් කියල හිත හදා ගත්තා....
ඊට පස්සේ LGL  එකට අත ගහල දවසක් යන්න වුනේ නෑ.. ගෑස්  මිල අඩු කලා ... එකත් කමක් නෑ ජනතාව වෙනුවෙන් කියල හිත හදා ගත්තා...
ඒ ඔක්කොමත් හරි කියමු..කමක් නෑ රටේ ජනතාවටනේ..
දැන් ආපහු  පොලි වැඩි කරන්න යනවා.. දැන් ඕක වැඩි කල කියල කී දෙනෙකුට සෙතක් වෙනවද ? ගන්න සොච්චම් pension එකෙන් දරු මුනුබුරොන්ටයි, බෙහෙත් හේත් වලටයි, කෑමටයි වියදම් උනාම ඕක පොතේ දාල කීයක් හරි ඉතුරු කරන්න පුළුවන් කීයෙන් කීදෙනාටද ? එකෙත් වාසිය ලොකු ලොකු අයටම  තමා. හැබැයි එකෙන් ලොකු ලොකු දේවල් මෙහෙ ප්‍රාග්ධන වෙළෙදපොළට කොච්චර බලපානවද.. කීදෙනෙකුට බලපානවද කියල නිකමටවත් හිතුනේ නැද්ද... ..
ඇයි  ඔබතුමාට අපේ මනාපෙ  එපාද ? අපි මේ රටේ මිනිස්සු නෙමේද ? ඔබතුමා  එක පැත්තකින් අහවල් ආයෝජන මිලියන බිලියන ගණන් වැඩි උණය කියනවා..ඉතින් අඩු ගානේ transaction වලට ගන්න CESS එකවත් අඩු කරන්න තරම් දෙයක්වත් ඔය PBJ ටවත් මතක් උනේ නැද්ද ..???
අනිත් එක ඕක ඔය මහ බැංකුවෙ අහවල් ප්‍රතිපත්තියට ඕක විරුද්ද නැතෙයි.. ඔහොම කරහම රටේ අහවල් වර්ධන වේගය අඩු වෙන්වෙයි කියල නිකමටවත් හිතුනේ නැද්ද ...
ප්‍රතිපත්තිය එකක්, budget එක තව එකක් වගේ අපිට පෙන්නේ...

NC I think you are wrong. Here Government has not increased Interest. They have only increased the interest rates for Senior Citizens through Government Banks. How do you expect them to live with 6% interest. Be reasonable. It will not effect economy.

Sstar wrote:

Sstar wrote:During the month of November, December and January there is a huge demand for consumer goods which are mostly imports. This has been witnessed during festive season during April and December. This will have an impact on exchange rate and resultant inflation. These inflationary pressure coupled with government desire to win the heart of the voters before elections will likely to increase the interest rates.

These are my thoughts. I sold my portfolio but bought back few shares and hold them currently. Please don't mix up my analysis with my investment strategy. They are both mutually exclusive.

I guess my prediction about interest rate seems reasonable with the government promising high interest rates to pensioners. With all these election goodies there will be serious pressure on CEB to increase interest rates or remove the artificial control thru have on interest rates.
How many senior citizens are above 55 are in the CSE?

There are senior citizens in CSE but they know they can earn more than 12% from the CSE with this bull run. Therefore no issue and the other thing electricity, water gas, oil, and many other goods prices are reduced then inflation to come down. When the inflation comes down then interest rates will go up????
Anybody can exit from the CSE but market will go up after the budget.

Ernie Tissera wrote:NC I think you are wrong. Here Government has not increased Interest. They have only increased the interest rates for Senior Citizens through Government Banks. How do you expect them to live with 6% interest. Be reasonable. It will not effect economy.

I feel what you means bro.. But
If senior citizens are supposed to live from interest income, do you think even 12% is enough..?
No. Compare with the living cost, to earn at least Rs. 15,000 interest, deposit should be at least 1.5MN. And how they going to keep this rate comparatively with loans. People can obtain a loan and pay back with the interest recived plus a profit in hand...
So, most importantly, this's aganist CB monetary policy, interest rate is a key factor in economics. Its chained with other key factors the inflation, economic growth and money supply... etc  
And its too high two digit number, bcz too high interest rate is a silent killer. So, its supposed keep in one digit number, just compare with India (8%), China (6%) and as well as developed countries (less than 1%). That's the sustainable economic. when interest rate is low, borrowings and investment become high, that how GDP expand. When interest rate high GDP become contract. So, changing interest rate of a country is not simple thing...
I know most elder people will against on me but its the truth.
So, Importantly, it cannot let elders to live from interest rate, they should have another strategy for elders like a pension scheme or allowance or such similar thing.
And personally, I dont think this rate is for long term, rather I see this as a trap for elders votes.

Sstar wrote:Interest rates are likely to go up during next 3 months due to government pressure to provide better deposit retuns to pensioners and others to get their vote. This would likely to have a short term increase in the interest and TB Rates. This will likely have a negative impact towards the stock market. 

Don't you think it's better to exit stocks prior to elections?

He or she kept trying it with different ways,mewa dakala sell karapau aya innawada,aiyo salli

Just sharing my knowledge with you all. Generally, increased government spending will crowd out investment and thereby increase the rates. But given the scenario in Sri Lanka at present where private credit growth hasn't picked up as per the low rates, there won't be much pressure on the rates. But the government has touched a monetary policy instrument this time.(Interest rates). ........... Although the adjusted rate is for senior citizens, most people will make deposits through one of their parents or grand parents. So the amount of deposits will be more than expected. (But there could be a quantity limit). If there is a quantity limit, I don't think there is any need to panic since this is just a political bait.

I still feel it will not be implemented.
If its proposed, then it will remain as it is

But one need to look at the whole interest rate cut from a holistic point of view.

If the expected rationale has not achieved, it will remain still in force for some time, as people mindset has to get adjusted and so do the Banks to spur grass root level SME to expand business and expand construction sector.

So if you are expecting a Rate Cut thereby assume the Market will go into correction, i feel this will not be the scenario.

As Rate is likely to remain as it is.

Of course with relaxing of Exchange control is to finalise very soon, this will attract black money to come through regulated channels, which will have a spillover effect to the Market.

So CSE is bound to have good growth, in years to come.

The signs are very good for CSE because international funds are coming in .....

interest rate remain as it is The Pensioner get 12% from government bank according to Budget

interest rate remain as it is The Pensioner get 12% from government bank according to Budget

Sstar wrote:Interest rates are likely to go up during next 3 months due to government pressure to provide better deposit retuns to pensioners and others to get their vote. This would likely to have a short term increase in the interest and TB Rates. This will likely have a negative impact towards the stock market. 

Don't you think it's better to exit stocks prior to elections?

Always coming with the negative

fireshelter wrote:interest rate remain as it is The Pensioner get 12% from government bank according to Budget

Problem would

1. Borrow @6-7% from Banks and Invest to get 6% additional.

How to monitor this game

So until its very clear, its prudent to assume as a chanda gundu and taking the elders for a ride

Interest rates should be decided by market forces

Govt role is to create conductive environment and interfere market forces when necessary

I think Even china doing this  now to certain extent

What we are doing ?

No rational at all.

Govt interfere  to keep interest rate abnormally  low level and

interfile to give high interest rates for pensioners

I  will personally benefit from this decision If implemented.

But what will happen to economy? What is the objective other tan votes of pensioners ?

CAn Jayasudara and Hudson Samarasinghe answer this question ?

SHARK aka TAH wrote:

fireshelter wrote:interest rate remain as it is The Pensioner get 12% from government bank according to Budget

Problem would

1. Borrow @6-7% from Banks and Invest to get 6% additional.

How to monitor this game

So until its very clear, its prudent to assume as a chanda gundu and taking the elders for a ride

very good point.

this is chnda gunduwak. practically it cannot happen.

I think goverment give 12% for fixed amount (one Lak or two Lak)

Blamau Yaka Kochchara Kaluda kiyala