Financial Times

Stock market gyrations as parliament resumes
By Duruthu Edirimuni
Some companies preparing to list on the Colombo Stock Exchange (CSE) like Nawaloka Hospitals and The Blue Water at Wadduwa have put their plans on the backburner for another couple of months until the political environment is clearer, The Sunday Times FT learns.

Jayantha Dharmadasa, Deputy Chairman of Nawaloka Hospitals Ltd, said while all preliminary work for a listing has been completed, they are awaiting the resumption of parliament on April 22 and a clearer picture of the government and its policies.

The Blue Water, a five-star hotel at Wadduwa managed by the Jetwing Group and owned by Union Resorts is also planning a stock market listing soon after the political climate settles down. Union Resorts chairman Ajith Wijesekara could not be reached for contact as he is overseas.

Meanwhile stockmarket analysts predict that the critical factor to fostering stock market confidence by the new United People's Freedom Alliance (UPFA) government is whether they will be able to show a majority in parliament on Thursday.

"The government's commitment to fiscal discipline will carry a lot of weight in building investor faith in the market," Dushyanth Wijayasingha, Head of Research at Asia Securities said. He said that in the short term, both these points are stabilising factors in the stock market.

Suren Liyanage, Head of Research at Lanka Securities, said that the market would even out on any positive news of the peace process. "Investors feel that if the UPFA can continue the peace process, the economic benefits will follow," he said.

Liyanage said that this will expedite the inflow of donor funds to the country, cheering and boosting the market. "Confidence in the market will return if the UPFA shows consistent policies, after parliament convenes (and the government starts to work)," he added.

Many analysts predict that after parliament resumes, both retail and institutional investors would consider possible long term investment plans based on the investor "friendliness" of the policies adopted by the new government. They said that during the next week investors may take a short-term prudent point of view with regards to equity investments by capitalising on market drops and selling out even on thin gains in the short term. "Investors expect a clear direction from the government of their industrial policy and how much they are going to spend in implementing them," Navin Ratnayake, analyst at John Keells Stockbrokers, said.

The UPFA government will have to give an indication on their plans with regards to the peace process, which will have a major effect on the market performance, he said. Ratnayake predicted that during the week, the market would remain flat just like last week.

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