With the current bull-run witnessed in the Colombo bourse, a trend of funds being shifted from banks and finance firms to the share market is seen with traders on the hunt for fast cash, according to some analysts.
“Some shares have been consistently gaining 10% per day during the past few days and when one compares these gains with the 10% per annum or so paid for a fixed deposit at banks and finance companies it is much more (the yield is higher), which is a main reason for this shift,” said Sarath Rajapakse, Director Capital Trust Securities.
According to Milinda Ratnayaka, Analyst SMB Securities, strong local high net-worth and retail participation was seen in the Colombo bourse in the past month. “The Colombo bourse has pushed both the gauges to fresh highs recently on the back of strong corporate earnings, low interest rates and positive developments in the macro factors. There has been some high retail interest,” he added.
Mr. Rajapaksa noted that this shift to shares by depositors would move the indices up by over a thousand points before the year end.
Another analyst agreed saying that the All Share Index will reach 6,500 if there are progressive steps in the budget, IMF blessings, further reduction in interest rates and firms' earnings growth in September results. Nikita Tissera, Head of Research Sampath Securities also noted that there’s a shift in funds from the banking and finance firms to the shares.
Analysts also say that amongst the quick speculative profit opportunities shares such as Reefcomber, The Finance Company, Nation Lanka Finance, Hunas Falls, Abans, Merchant Bank, Odel, Pan Asia, Peoples Merchant Bank, Richard Peiris, etc were seen appreciating by around 10% during the past few trading reaching the upper boundary of the allowed price band.