Bourse up sharply as SEC eases broker credit rules

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Turnover hits Rs. 3 bn., ASPI up 1.75% and Milanka 1.19%

The Colombo bourse surged yesterday with both indices gaining sharply and turnover topping Rs.3 billion partly on account of the Securities and Exchange Commission easing broker credit restrictions, analysts said.

The All Share Price Index was up 128.92 points (1.75%) and the Milanka up 80.79 points (1.19%) on a turnover of slightly over Rs.3 billion, up from the previous trading day on Monday of Rs.2.03 billion, with 162 gainers sharply outpacing 44 decliners.

"The market rebounded today with both indices and turnover up," Prashan Fernando of Acuity Stockbrokers said. "The SEC’s decision on credit restrictions helped to a certain extent."

Business volumes came largely from JKH which closed a rupee short of the Rs.300 mark, HNB where continuing foreign interest was noted, and Nation Lanka and Central Finance where heavy retail play was evident.

Volume-wise, Asiri Hospitals saw nearly 20.2 million shares done between Rs.8 and Rs.8.70 gaining 50 cents to close at Rs.8.60 with two crossings of nearly 16.3 million shares at a price of Rs.8.50 being among the trades.

JKH closed Rs.2.90 up at Rs.299 on over 0.8 million shares traded between Rs.296.80 and Rs.299 generating the day’s top turnover of Rs.242.2 million while HNB with two crossings at Rs.230 closed flat at Rs.229.90 on slightly over a million shares done between Rs.229.90 and Rs.230.

Nation Lanka (previously CSF) closed 20 cents down at Rs.23.30 with 10.1 million shares traded between Rs.21.70 and Rs.24.50.

Central Finance was up Rs.26.70 to close at Rs.1,600.20 on over 0.1 million shares done between Rs.1,575 and Rs.1,610.

Guardian Capital Partners (previously Watapota) was the day’s biggest gainer moving up Rs.73.40 to close at Rs.275 on nearly 0.4 million shares done between Rs.196 and Rs.285.

Commercial Bank closed Rs.1.80 up to Rs.264 on over 0.5 million shares while Blue Diamonds with heavy retail play saw nearly 22 million shares done between Rs.4.20 and Rs.4.90 gaining 90 cents to close at Rs.4.70.

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SEC grants more time to clear debtors on improved market conditions

The capital market watchdog said it would give stock brokers more time to clear credit extended by them to investors as market conditions have improved, in a move widely anticipated by market analysts earlier this week.

The Director General of the Securities and Exchange Commission of Sri Lanka Malik Cadre made this announcement in a circular to the Colombo Stock Exchange yesterday (19), which we reproduce in full as follows:

"Further to the Directive of the SEC dated 29th November 2010 (SEC/LEG/10/11/77) the Securities and Exchange Commission of Sri Lanka at its 278th Meeting held on 13th May 2011 has decided to grant further relief in respect of the time granted to Stock Brokers to clear their remaining 50% of the debtor balance as follows:

1. 25% of the above remaining debtors over T+3 days to be cleared by 30th September 2011; and

2. The balance 25% to be cleared by 31st December 2011.

As such the Directive of the SEC dated 29th November 2010 (SEC/LEG/10/11/77) stands amended accordingly.

The Commission decision to grant the relief as mentioned above was based on the improved market conditions, especially having taken cognizance of the fact that majority of the Stock Broking Companies have been able to reduce the risk exposure of debtors over T+3 days by 50% as at 31st March 2011 and representations made by market participants.

The Colombo Stock Exchange is also directed to disseminate this Directive of the SEC to all members of the Colombo Stock Exchange."