Stock market investors positive after meeting with Cabraal

• Investors share concern and suggestions after CSE losing Rs. 705 b in value in a month after January saw dizzy gains
• State Minister Cabraal encourages investors to take long-term view; assures outlook remains positive despite challenges as Govt. is taking all necessary measures 

A group of long-term equity investors yesterday expressed optimism of improved outlook for the Colombo stock market as well as the economy following a meeting with State Minister of Money, Capital Markets and Public Enterprises Reform Nivard Cabraal on Saturday. 

“We had a very positive discussion,” one of the investors said, adding that lot of ideas were exchanged as to how the market can be developed further along with improved investor sentiments. “The State Minister was receptive and welcomed pragmatic proposals,” he added.

Cabraal briefed investors about the outlook for the economy whilst his general advice as one investor put it was “not to invest with tomorrow’s breakfast money today” but take a medium to long-term view. 

The State Minister had also expressed confidence that the Government is managing challenges well with regard to debt repayment, attracting foreign direct investments as well as stimulating economic growth amidst the COVID-19 pandemic. New legislations such as on the Port City as well as the new SEC Act was highlighted. 

Another investor said among issues discussed were broker credit, educating and protecting new retail investors, encouraging State funds to invest in fundamentally sound listed companies as well as maintaining a regular dialogue with market stakeholders. 

As a follow up to the meeting, it was decided to hold a formal investor forum with State Minister Cabraal enabling participation by a larger group. 

The meeting with Cabraal comes hot on the heels of stock market losing Rs. 705 billion in value since end January. The All Share Price Index has declined by 1,614 points or 18.6% and the S&PSL20 has dipped by 723 points or 20.5% since between 1 February and 5 March. In January, the Colombo Bourse rose to dizzy heights with market capitalisation swelling by Rs. 829 billion on the back of ASPI gaining by 28% and the S&PSL20 shooting up by 33%. Year to date the ASPI is up 4% and S&PSL20 up 5.8%. 

Even prior to Saturday’s meeting to allay unnecessary investor fears, Cabraal took to Twitter. He said “the performance of many companies this year is definitely on the rise. The CSE’s overall PEs are low. The Rupee’s holding value, interest rates are low. There is ample room for the market cap to grow. It is time to hold or buy,” said one tweet. 

“On a medium term perspective, the market cap of Sri Lankan listed companies should be well over Rs. 4.5 trillion. It is only Rs. 3 trillion now. Those who are selling at current ASPI level are surely making a mistake,” State Minister Cabraal tweeted on Friday. 

In another Cabraal said: “Requested CSE to allow broker credit based on total portfolio and not force-sell individual stocks. Will also soon discuss this matter with banks and other lenders to arrive at a suitable solution.”