The question being asked in banking circles during trading at the Colombo bourse this week was why the Hatton National Bank (HNB) purchased 4.2 million shares equivalent to a 2.6% stake in NDB Bank. Was it a one-off investment or is there some planned agenda?
It is believed that NDB has intentions of amalgamating with another bank or a major financial institution. Another worrying issue is the fate of the future IPOs. Investors in Free Lanka Capital Holdings (which closed at Rs 5.50) seem to have burnt their fingers. Is a 50 cents gain per share worth the trouble of subscribing in an IPO? This was a comment made by a seasoned investor in the Colombo stockmarket.
He reasoned that large private placements prior to the IPO are the cause, because high net-worth individuals and institutions who have blocked their money in the private placement want to recover their investment as soon as possible. In this context it was mentioned that the Hong Kong and Sri Lanka Joint Venture, Textured Jersey Lanka intends to offer 10% of the shares through an IPO, but at the same price as the private placement.
Meanwhile to comply with the Central Bank ruling that registered financial institutions list in the Colombo Stock Exchange, two more finance companies, Chilaw Finance PLC and Multi Finance PLC are making an offering or seeking a listing.
During the week it was announced that MTD Walkers came again into the marine engineering industry with the acquisition of the renowned Colombo Engineering Services. This may be part of the funds that they obtained from their recent rights issue. MTD Walkers had a minor swing but ended the period at Rs 70. Activity in the illiquid stocks compensated for some of the dullness in the market on April 20. Huejay International Investments rose to Rs 275 and cooled off. The closely-held Lake House Printers and Publishers experienced unusual demand and an extraordinary price structure when it peaked at Rs 215 before easing off on dealings of over 237,000 shares.
Paragon Ceylon reached Rs 675. A similar trend was noticed in Mercantile Shipping and Gestetner. The next day Lake House Printers & Publishers caved in to close at Rs 191 and Huejay International ended at Rs 240. Paragon Ceylon however made further headway to reach Rs 1012.50. E B Creasy was up at Rs 3100. Hunters slipped to Rs 1175 and Colombo Pharmacy also eased off to Rs 3150. PrintCare in which a sub division was announced was on the upside and touched Rs 350 on Thursday, before a contraction.
Price band - A price band was imposed on Alufab from April 19 to May 4.
The All Share Price Index during the short, 4-day week ended at 7456.82 while the Milanka Index was at 6947.34. The turnover for the four days was Rs 6.8 billion.