Stock market blues
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It was that time of the day when Aldoris, the choon-paan karaya, would come down the lane in his tuk-tuk giving us a taste of his loudspeaker music before a taste of his ‘maalu paan’! Well this time, the trio was waiting at the gate, as I had also shown interest in a ‘maalu paan’ while writing my column.“Ah Aldoris, ada apata monawada thiyenney (Well Aldoris, what do you have for us today),” asked Kussi Amma Sera. “Aluth biththara pastry thiyenawa (I got some new egg pastries),” he said.
“Ei mechchara ganan, biththara wala mila adu wela thiyena kota (Why are they still expensive when egg prices have come down)?” asked Serapina. “Aiyo missi, wena okkoma deval wedi wela thiyena wita, apita mila adu karanna bae (Aiyo miss, everything else has gone up, so we can’t reduce the price),” he said.
“Eka thama nidahasata dena karuna. Lajja wenna oney ochchara loku laabayak thiya ganna eka gana (This is the common excuse given. You should be ashamed to make such a high profit),” said an angry Mabel Rasthiyadu. “Aiyo missi apita podi laabayak thiyenney. Eken thama geval wala wiyadama dara ganney (Aiyo miss, we only make a small profit and with that I have to meet my household expenses),” grumbled Aldoris. “Meyath ekka randu wenney nathuwa imu. (Let’s not fight with him. He also has to make a living),” said Kussi Amma Sera, intervening in what may have turned out to be a ‘hot and spicy’ argument.
Later walking into the kitchen, I fetched my ‘maalu paan’ and a mug of tea and as I returned to my computer the home phone rang. It was my jolly-mood economist friend, Sammiya (short for Samson) who was calling on Thursday morning. “I say…..the stock market is doing very well,” he said. “Indeed….and that is for many fundamental reasons,” I said. “Like what?” he asked. “Well interest rates have fallen sharply and many who depended on interest income from deposits may have shifted their hard earnings to the stock market and investor sentiment has improved,” I said. “I was thinking on the same lines. Interest rates which were inching towards 30 per cent some years back are now at a paltry 7-8 per cent per annum. How can retirees who mostly survive on interest income survive?” he asked.
Stock market analysts have said the market is doing extremely well due to the government carrying forward the economic plan set by the previous regime which includes the debt structuring process of the International Monetary Fund (IMF). Under this plan, the country’s bilateral debt of US$ 10 billon is due to be paid in 2028 under an agreement with donors. With the governing party having a 2/3rd majority in Parliament and unlikely to be shaken by the opposition, sentiment has also improved, reflecting in the buoyant mood in the stock market.
The Colombo Stock Exchange (CSE) marked a historic milestone on August 4 with the All Share Price Index (ASPI) reaching the 20,000 mark for the first time ever. Daily turnover has been in the region of Rs. 3-5 billion. The CSE, in a statement earlier this week, said that Sri Lanka’s capital market has shown a strong performance in recent years, with notable growth in index returns, market turnover and capital raising activities. In 2023, the ASPI and S&P SL20 posted returns of 25.50 per cent and 16.42 per cent respectively, followed by 49.66 per cent and 58.46 per cent in 2024. The momentum has continued into 2025, with increased market turnover and sustained foreign interest. The market also witnessed a net foreign inflow of US$ 66.5 million in 2024 and raised a record $ 568.61 million in capital.
A positive market is one of the reasons for the CSE to organise an investor forum in Singapore on August 12. Among the speakers were Prof. Anil J. Fernando, Minister of Labour and Deputy Minister of Economic Development; Dr. P. Nandalal Weerasinghe, Governor, Central Bank; Senarath Dissanayake, High Commissioner of Sri Lanka to Singapore; Ruchir Desai, Fund Manager, Asia Frontier Capital Ltd; and Dr. Naveen Gunawardane, Managing Director, LYNEAR Wealth Management.
One local investor described the stock market as ‘rocking and rolling’. Gone are the days when ‘pump and dump’ traders rocked the market with shady and manipulative deals during President Mahinda Rajapaksa’s 2005 to 2015 tenure in office. Many investors burnt their fingers in the process losing millions of rupees as corrupt traders bought stocks at inflated prices and then unloaded it in the market to unsuspecting investors. When two former chairpersons of the Securities and Exchange Commission (SEC) Ms. Indrani Sugathadasa (ironically wife of the powerful Presidential Secretary Lalith Weeratunga) and Thilak Karunaratne sought to probe the misdeeds, errant traders appealed to the President with various accusations that led to the resignation of these two respected officials. This resulted in Nalaka Godahewa being appointed as SEC chairperson.
Since Mahinda Rajapaksa’s departure from the presidential throne, the market has settled but the pump and dump traders have not been brought to justice as the wheels of the SEC have been slow in this process. On the other hand, what happened to the Parliamentary Committee appointed by then Prime Minister Ranil Wickremesinghe to probe ‘pump and dump’ trades in the stock market in March 2015? According to a Sunday Times report of March 22, 2015, the Prime Minister – in keeping with an election promise – had assured Parliament that a Parliamentary Select Committee (PSC) would be appointed to probe serious violations in the past few years in the stock market. The Prime Minister named several high profile personalities with regard to allegedly manipulating the market. So, is there a report by this committee or was it actually appointed?
Industry officials believe the SEC would eventually file charges against these errant traders. It remains to be seen when this will happen. At the moment the market is rock solid with the SEC keeping a close eye on any malicious attempt to disrupt it, similar to what happened in 2010-2012.
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