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Monday, 23 July 2012 01:00 - - {{hitsCtrl.values.hits}}
The Colombo Bourse’s performance will be under scrutiny today following what brokers described as “very positive” meeting on Friday with President Mahinda Rajapaksa who was emphatic that the stock market must be revived.
The market on Thursday gained by 1.5% ahead of President’s meeting though on Friday it closed almost flat with low activity as brokers and investors were awaiting the outcome of the capital market stakeholders’ dialogue. Year to date the ASI is down by 20% on top of 8.5% dip in 2011 after two years of bull run.
Contrary to some maintaining President’s forum didn’t trigger decisions, brokers and investors were pleased that contentious issues such as overregulation, alleged malpractices, credit rules for brokers and other challenges facing capital market were thrashed out.
“The message from the President was loud and clear. He wants the stock market revived with a more pragmatic approach to regulation,” a CEO of a broking firm told the Daily FT. “The Treasury Secretary who was previously perceived to be wary of capital market developments, too was very positive and the President instructed him to reconvene the stakeholders in two weeks time as a follow up to Friday’s meeting,” the CEO added.
Another said that a false impression has been created that brokers had wanted unlimited credit apart from halting investigations. “This is not true. Our position on credit rules has been clearly communicated to the SEC. We are also not opposed to regulations provided there is greater consultation before they are implemented. The SEC can also proceed with their own investigations to deter any malpractices discovered,” he explained.
Other analysts said the overall message and the decision to continue the dialogue with Finance Ministry confirmed that the Government is very serious about reviving the stock market.
“We didn’t make a case for a market with no regulations. In fact there must be regulations and what we strongly opposed was overregulation with successive ad-hoc measures and the creation of a fear psychosis,” high net worth investor Dilith Jayaweera told the Daily FT. Dilith together with Nimal Perera were seen as prime movers for a frank dialogue between capital market stakeholders and the President and officials in his capacity as Minister of Finance whilst it was also described as a pre-Budget forum.
Sentiments from the Securities and Exchange Commission (SEC), the Colombo Stock Exchange (CSE) and some brokers had been different whilst reports so far had been mixed as well.
Whilst Chairman Tilak Karunaratne told a SEC Directors meeting Friday afternoon that they stood their ground, some Commissioners were disappointed with the tone of the President’s forum and the treatment meted out.
The divisions within the stock broking community appear to be more pronounced than before in the run up to the Forum with the President as well as during the discussions.
