Credit Clearance still takes the market down....?

anu · 1 Credit Clearance still takes the market down....? Sat Mar 19, 2011 4:24 am

anu

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News from LBO.LK:

http://www.lankabusinessonline.com/fullstory.php?nid=820587926

Please note the following lines in the above news item:

" Sri Lankan stocks closed 1.1 percent lower Friday ending a two day rally as buyers in credit funded positions sold out, feeding a market consolidation downwards, brokers said"

The question is, whether the above mentioned credit funded position is:

1. Retail? If so is that is due to T+5 or credit allowed by brokers beyond this T+5 or credit outstanding from last December.

2. Croporate? Is it due to 50% mandatory reduction in debt positions of corporates with brokers?

Knowledgeable members on this are welcome to contribute.

anu · 2 Re: Credit Clearance still takes the market down....? Sat Mar 19, 2011 4:54 am

anu

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You can also have a look at this news item in S/Times:

http://www.sundaytimes.lk/index.php/news/5553-colombo-share-prices-slide-ahead-of-settlement-dates

"Colombo share prices continued to slide on Tuesday, reflecting a trend seen in the past few days which brokers attribute to credit settlement dates and the proposed Free Lanka Capital share issue later this week.
Broking firms have to settle 50 % of their dues (credit) by March 31while investors were also holding onto their cash to invest in the Free Lanka Capital Holdings IPO which opens on Thursday"

Does this mean that there is retail credit clearance involved?

Further:

http://www.dailymirror.lk/business/125-stock/10237-market-heads-further-down-09th-march-2011.html

From the above:

"The retail selling is a resultant of the need to raise capital for the forthcoming IPO’s, monies still locked up with the previously concluded IPO of Union Bank and also the 31st March 2011 deadline given to the brokering houses to clear 50% of the debt outstanding as at end 2010."

Are retailers still clearing the end 2010 broker credit balance, as per above?

wis · 3 Re: Credit Clearance still takes the market down....? Sat Mar 19, 2011 9:37 am

wis

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Nobody will acknowledge the debt situation. Otherwise there could be a unfavorable situation. If they are wise, broker firms should have instructed their employees not to reveal their situation. So this won't go out of hand. I remember after the tsunami in 2004 first thing our managers of an international firm told us was not to discuss tsunami situation with the clients because they could get panicky doing business with us.
I was monitoring a few stocks yesterday. What I feel is that the shares are force sold in a controlled manner so that there won't be a huge dip.
I also noticed most of the top gainers last Friday were illiquid shares again.

Rocky

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Some Brokers are very innovative in opening up new avenues of business by providing the credit laden investors with alternate credit through their other companies.(Not banks)

So credit is not the issue really. It is the sheer panic caused by bad talk!!

anu · 5 Re: Credit Clearance still takes the market down....? Sat Mar 19, 2011 2:47 pm

anu

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This subject was dealt in another thread:

http://forum.srilankaequity.com/t1858p40-some-brokers-debts-are-in-the-billions-of-rupees

This is what Rajitha had to say when it was argued that there is retail credit still left to be cleared and that was a reason for market to come down:

quote

Credit Clearance still takes the market down....? Empty

Credit Clearance still takes the market down....? Empty

Re: some brokers’ debts are in the billions of rupees

Rajitha on Thu Mar 17, 2011 1:01 pm

It seems pointless talking or trying to explain to people that can't grasp with facts! All they want is people to praise them for putting fuel and writing the same rumor they heard from some one else and get upset if any one disagree with them. ( Not worth the effort mono we just get negative rep thats it! ). It seems best to nod along with idiots although you know they are posting baseless rumors and can't even talk 1 minute to try and confirm even if it might have the tiniest bit of truth!

BTW ANU we did had some facts unlike your rumors that you trying to point out as facts! All the peoples brokers + mine as we heard have 0 credit left over from last year to clear( Atleast from retailers as i said) . But including you + many others have t+5 credit !

unquote

This was the opinion of mono along with Rajitha

Now given the scenario explained in the news item and other members,

who are "IDIOTS WHO ARE POSTING BASELESS RUMOURS"
Left for anybody's guess!!

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Credit Clearance still takes the market down....?

1 Credit Clearance still takes the market down....? Sat Mar 19, 2011 4:24 am

anu

2 Re: Credit Clearance still takes the market down....? Sat Mar 19, 2011 4:54 am

anu

3 Re: Credit Clearance still takes the market down....? Sat Mar 19, 2011 9:37 am

wis

4 Re: Credit Clearance still takes the market down....? Sat Mar 19, 2011 12:49 pm

Rocky

5 Re: Credit Clearance still takes the market down....? Sat Mar 19, 2011 2:47 pm

anu

6 Re: Credit Clearance still takes the market down....?

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