Bourse crosses half a million ‘individuals’ milestone

Despite being Asia’s worst performer, there is some news for cheer as the Colombo Bourse has achieved the milestone of over half a million local individuals dabbling in shares though not regularly.

The total operative CDS accounts of local individuals by end March grew to 500,198, thereby crossing the half a million mark for the first time in Bourse’s history.

As per the Colombo Stock Exchange (CSE), this figure excludes the number of multiple registrations sought by the same client through different participants.

The total number of registered CDS accounts amounted to 677,296, up from 666,665 as at end of last year reflecting an increase of 10,631 over the three months ended in March.

The number of foreign individuals having CDS accounts was  3,946, up by 99 from 3,847 last year whilst local companies grew to 7,485 as against 7,321 (up 164) and foreign companies were 4,148, up by 36 from end December 2011.

Analysts said that the increase though nominal was encouraging given the fact that the stock market has remained bearish so far this year on top of the first negative return in three years in 2011.

“The fact that over 10,000 new accounts have been opened is positive. The first quarter didn’t have many IPOs either whilst bearish sentiments as well as rising interest rates had also made investors look to opportunities outside the Bourse,” they added.Largely on account of the relatively better performance of the Bourse as well as spate of IPOs, the number of local individual accounts rose by 20% to a record 81,798 last year. Total registrations recording a similar percentage growth amounted to 666,665.

In the first quarter of this year local individuals’ contribution to market turnover was a healthy 34.6%, same as the 2011 full year figure but higher than 22% in 2008. In 2009 and 2010 the share was 36% and a high 44% respectively.

Local companies accounted for 40.6% and foreign companies share was 23.7% in the first quarter of 2012.

As of yesterday the year to date negative return of All Share Index was near 11% whilst MPI is down by 6%. Last year ASI was down by 8.5%, reversing fortunes enjoyed by Colombo in 2009 and 2010 as world’s most consistent best performer with returns of 125% and 96% respectively.

The only silver lining of the Colombo bourse this year is the strong net foreign inflow of Rs. 21 billion year to date as opposed to outflows in the past three years.  

That apart the market’s bearish performance continued yesterday as well. Arrenga Capital opined yesterday that the languid steps of the market seem to be discouraging most investors as it is taking too long to shake off its previous over runs.

“Most players in the market have transformed to be fidgety market timers as they wait to see the sunny side of the market whilst ignoring the attractively beaten down shares.

Investor confidence is the only element that could revitalise current market conditions and we advise investors to have a closer look at counters in the banks, food, beverage and alcohol and selected counters in the Manufacturing sector,” it said.

Asia Wealth Management noted activities at the bourse continue to show very dull sentiments as retail participation has been waved off and most of the institutional investors are on a bargaining buying spree.

“However it’s noteworthy to mention that the foreign participation has been continuously witnessing on the bourse which gives a light of hope for both local and foreign investors who are waiting to enter into the market again,” pointed Asia.

DNH Financial said trading remained lacklustre as investors sit in the wings following the (Sinhala-Tamil) New Year holidays.

“Although some analysts may begin to question the sustainability of Sri Lanka’s economic growth pointing to the possibility of a deceleration, we believe that a significant slowdown is highly unlikely despite the high interest rate environment. However, we advise investors to continue to adopt a selective approach in their stock picking focusing on medium to longer term returns,” DNH added.