Wednesday, February 28, 2007

will the colombo market fall today following global markets?

record breaking colombo stock market took the yesterday's terrorist attack on foreign diplomats on its stride as usual (all share index falling by a mere 0.5% and milanka price index half of that). investors have a good idea about what matters in the fight against terrorism, and have long factored in possible ltte terrorist attacks and government's present course of action. they know that yesterday's incident does not change anything much as far as economy is concerned, except for some international publicity (bad), and another clear reminder to foreigners of ltte's brutality (good).

on the other hand yesterday's (27th) big falls in the big international markets could have some effect in sri lankan market. for those who do not know, first the chinese market and then the american market ( last night in sri lankan time) went through sell offs ( due to various reasons including falling chinese market, bad news on the u.s. economy, computer glitches due to high volumes. etc). dow fell about 3.5 %. today morning the east asian markets are falling because dow fell.

question is whether sri lankan one will fall? in spite of sri lanka's high integration with international trade, sri lankan stocks have not shown much correlation with world markets in the past, due probably to the fact that about 75 % of the market is driven by local investors. so it may be that there won’t be much effect. it may even rise if investors consider yesterdays small fall here as a buying opportunity as they have done in the past.

it wouldn't be a bad thing to have a moderate correction after all the record breaking imo.

anyway let us see what happens today.


Sri Lankan said...

Fingers crossed.

sittingnut said...

sri lankan:
fingers crossed for what? a fall? :-)
anyway it is rising as of now.

Jack Point said...

Market fell but unlikely to have been caused by world events just the attack on the diplomats yesterday.

Worl markets apparently dipped because of a slowdown in the US economy and fears over China overheating.

Presumably the impacy on SL's economy will depend on the trade levels with the US. Anybody got any figures for that?

Also, the impact to the CSE would be to extent that the wider SL economy is reflected in the CSE. My guess is teh garment industry maybe affected but this sector is not listed on the CSE.

ANybodygot any idea as to how the major export companies Hayley's , Dipped Products etc have fared?

sittingnut said...

it went down slightly. am busy at the moment will reply in details later

sittingnut said...

jack point:
market fell only slightly on wed. , there was a relatively bigger (though still slight) fall on thur. followed by a recovery on friday. overall the effect was very slight

companies you mention and others of similar nature fell slightly.

most companies listed in cse will not be effected directly by a slowdown in usa but almost every thing in sri lanka would be effected by indirectly by big slowdown in usa.