The Colombo All Share Index (ASI) fell below the 2,000 level on both Thursday and Friday, for the first time in more than two years. The last time it fell below this level was at 1,968.89 on January 25, 2006.
Friday’s market close saw the ASI at 1,924.69 which was 88.41 basis points down, with market analysts predicting more gloom, but at the same time saying that it has performed far better than some others in the region. A stock analyst said that some markets such as the Nikkei 225 Index in Japan was down as much as 11 % on Friday.
Tushan Wickramasinghe, Managing Director Lanka Orix Leasing Securities (LOLS) said in the current context it is an advantage Sri Lanka does not have derivatives and short selling. This year the rupee has stabilised against the US dollar unlike the other countries, he said. “Credit extended by margin trading institutions and stock brokering firms are at low levels and margins are under control. Sri Lanka seems to be at the end of a near three decade war. This should make it one of the best performing markets in 2009. CSE has performed better than other markets in the world,” he added. The ASI peaked on February 13, 2007 at 3,016.14, its highest so far.
In this situation, some speculate US fund manager Raj Rajaratnam will sell his JKH stake, others say he will not sell at the current prices. "But it is better to sell now than selling when it goes down further. Mr. Rajaratnam in his name has approximately 9 percent in JKH. So far together with his funds, he has lost about Rs. 4 billion in JKH,” analyst said. “Altogether he owns 16 percent of the company. JKH has 660 million issued shares and 16 percent from this amount is 105 million shares. On average the loss per share is Rs. 40 and the total amount comes to Rs. 4 billion," the stock analyst said. He said similarly the Captains’ family with their 26 % in the company may have lost Rs. 6.8 billion.
Another stock analyst noted that there was a Rs. 30 million inflow in September in the diversified sector in the CSE. "This sector consists of Hayleys, JKH, Richard Pieris' and Hemas Holdings.
So, if Mr. Rajaratnam was selling there would effectively be a net outflow in this sector as it is depicted as foreign selling, because he holds a considerable amount of JKH shares and it will be reflected in the sector as an outflow," he said, adding that it is highly improbable he would sell in the future as well at the current price levels.
However on Friday the market saw 668,000 shares in JKH changing hands raising speculation about Mr. Rajaratnam’s exit from the stock.
Amongst the top market capitalised firms – Sri Lanka Telecom (SLT), JKH, Dialog, Distilleries and Commercial Bank (CB) -- Dialog was the worst performer losing Rs 99.76 billion in market capitalisation from 1st January this year up to last Tuesday.
“JKH saw a Rs 30.53 billion loss during the same period with SLT seeing a Rs 15.79 billion drop in market capitalisation,” Vajira Premawardhana, Executive Director LOLS said. He noted that Distilleries lost Rs 12.6 billion, while CB lost Rs 12.35 billion.