Time to buy as market has corrected itself enough: Panel

Tuesday, 15 November 2011 01:42 - - {{hitsCtrl.values.hits}}

By Cassandra Mascarenhas

Market experts last week declared that the stock market has corrected itself enough and that it is now a good time for investors to buy.

This assessment was made at an interactive forum titled ‘Share Market Volatility – Causes and Remedies’ organised by the Institute of Chartered Corporate Secretaries of Sri Lanka in partnership with the Daily FT.

“If you take the overall market, there is a bit of downside, but some stocks are very cheap right now and there are some very good value buys out there,” said CT Smith Holdings Executive Director and Chief Operating Officer Sheyantha Abeykoon.

While admitting that on the retail side people are stuck again concerning cash, Abeykoon does not subscribe to the view that there is no cash in the market, but instead that there is a certain amount of cash hoarding going on right now. LR Global Lanka Asset Management Managing Director Channa de Silva mirrored these sentiments, stating that the market is correctly priced at the moment.

“Overall, leaving out the pony or penny stocks, the market is attractive now.”

CSE Chairman Krishan Balendra said: “If you look at the top 30 or 40 stocks and look at the average P/E, it is now getting to that point where it is getting comparable to some of the regional P/Es so I wouldn’t say that the market is overvalued any longer, but at the same time when you have a downturn like this, sometimes the market tends to overreact on the downside but on fundamentals it is starting to get there.”

Brandix CFO Hasitha Premaratne commented: “On the valuation point of view, I think you really have to go stock picking, that is the way forward and there are good stocks and good companies valued at the right prices at the moment but with the ASPI in general, you have to be cautious as it is very artificial still because some crazy stocks are driving it up and down.”

Capital Alliance Holdings Managing Director Ajith Fernando said: “When you say market, I break it into two – you have the real market and the pony market. The pony market has to crash dramatically; there is no question about it. The real market is at good value now and has good stocks but it could come down a little bit more because of the overshooting effect but this is the time institutional investors need to start getting in because when it turns it gets too late and then you start chasing stocks.”