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A senior stock market analyst says President Mahinda Rajapaka has little options at his disposal to lift the falling stock exchange, warning that relaxing regulations and interfering with ongoing investigations into market malpractice would not help the bourse in the long run.
"The only option available to him is to advise all industry stakeholders to promote the CSE globally. The EPF cannot lift up the bourse by investing in dud stocks and banks most definitely will not invest in the stock exchange because it would be bad for their credit ratings. So the only option is to attract foreign investment to the bourse," the analyst said not wanting to be named as if promoting tough action against market malpractices was a bad thing in this country.
He went on to blame a section of the broker community and investors.
"They created this situation. They created a hype over dud or junk stocks and now, with retail investors staying clear due to high interest rates, they cannot offload them and are being bled. They are desperately trying to blame the regulator. Another reason for the market’s fall, is that it is undergoing a correction. If investors are serious about it, now is the best time to buy up fundamentally sound stocks.
"If foreign investors are to come in and if ordinary retailers are to benefit by investing in the stock exchange, the regulator must be allowed to do its job. There is some concern that there is some indirect but influential lobbying to halt investigations into market malpractice, even if this is done, the stock exchange cannot sustain growth if it cannot attract more investors. The regulator is doing a good job, but it needs to be strengthened further.
"Heftier fines and a prison term or two for those found guilty of market irregularities is probably the medicine required at this stage, but knowing how the system works in this country it is unlikely to happen," the analyst said.
As at yesterday, the net foreign inflows into the bourse stood at Rs. 23.7 billion.
http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=57185
"The only option available to him is to advise all industry stakeholders to promote the CSE globally. The EPF cannot lift up the bourse by investing in dud stocks and banks most definitely will not invest in the stock exchange because it would be bad for their credit ratings. So the only option is to attract foreign investment to the bourse," the analyst said not wanting to be named as if promoting tough action against market malpractices was a bad thing in this country.
He went on to blame a section of the broker community and investors.
"They created this situation. They created a hype over dud or junk stocks and now, with retail investors staying clear due to high interest rates, they cannot offload them and are being bled. They are desperately trying to blame the regulator. Another reason for the market’s fall, is that it is undergoing a correction. If investors are serious about it, now is the best time to buy up fundamentally sound stocks.
"If foreign investors are to come in and if ordinary retailers are to benefit by investing in the stock exchange, the regulator must be allowed to do its job. There is some concern that there is some indirect but influential lobbying to halt investigations into market malpractice, even if this is done, the stock exchange cannot sustain growth if it cannot attract more investors. The regulator is doing a good job, but it needs to be strengthened further.
"Heftier fines and a prison term or two for those found guilty of market irregularities is probably the medicine required at this stage, but knowing how the system works in this country it is unlikely to happen," the analyst said.
As at yesterday, the net foreign inflows into the bourse stood at Rs. 23.7 billion.
http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=57185
