Reaffirming that good stocks can deliver exponential value the Singer Finance Lanka (SFL) yesterday staged a dream debut on the Colombo Bourse producing a high 240% return to investors who participated in the record setting Initial Public Offering.
The Colombo stock market literally banked on Singer Finance yesterday with 21.3 million of its shares changing hands via 13,070 trades. It peaked to a high of Rs. 50.80, up by 238% from its IPO price of Rs. 15 per share. The stock finished the day at Rs. 49.20, still higher by 228% or Rs. 34.20. Deals on Singer Finance generated the highest turnover of Rs. 949.5 million. The quantity traded amounted to 80% of the offered amount in the IPO and 20% of the stated capital.
Asia Securities said Singer Finance witnessed active participation from all 3 investor clusters during the day. Other analysts said Singer Finance performed exceptionally given the strong brand value as well as the unprecedented demand during the IPO.
The Rs. 400 million worth IPO was oversubscribed by 135 times, an all time record, with applications worth Rs. 54 billion received.
Whilst brisk trading and demand on Singer Finance sparked a bull run, the market lost momentum later in the day.
“Investors lost enthusiasm during the day despite the Rs. 3.17 billion turnover on a volume base of 156.7 mn shares,” Asia said.
In addition, high net worth interest was evident on the blue chip counter Hayleys, whilst Fist Capital Holdings, Laugfs Gas and Panasian Power grabbed retail participation during the day.
“Indices slipped slightly today as investors focused on the IPO gains ahead of other stocks. However, buying interest was seen in other financing companies such as Central Finance and Asia Capital. Mixed sentiments seem to prevail in the absence of aggressive institutional investor participation,” NDB Stockbrokers said.
Bank, Finance & Insurance and Diversified were the highest contributors to the market turnover. Bank, Finance and Insurance sector index increased by 0.15% while Diversified sector index decreased by 0.26%.
The market also saw three crossings being recorded for 354,700 shares of Hayleys Plc at Rs. 350; 5,000,000 shares of Dialog Axiata at Rs. 11.80 and 75,000 shares of John Keells Holdings at Rs. 294.50.
Other analysts said dip in JKH and Commercial Bank prices at latter stage dragged the indices down.
The ASPI closed 0.35 percent or 24.54 points weaker at 7,008.06. It has been Asia’s best performer with 5.6 percent gain so far in 2011 after being the top performer last year with a 96 percent return.
Reuters quoted unnamed analysts as saying the heavy retail selling was prompted by investors cashing in to free up money for upcoming initial public offerings, $9 billion of which are expected this year.
The overall dip of the market however was its first in 13 sessions amid retail profit-taking.
Meanwhile Cargills (Ceylon) announced an interim dividend of Rs. 0.50 per share.
Sri Lanka’s rupee <LKR=> edged down to 110.78/80 a dollar from Friday’s 110.76/79 on importer dollar demand, traders said.