General Manager of the SKM Lanka Holdings Stock Brokers, R.M.B. Senanayake says sooner or later the Colombo Stock market should correct itself.

He says such correction has not taken place because of the excessive liquidity that flows to the market.

Senanayake made these comments by posting a response to an article we published yesterday under the title of “CSE on a bubble, will fallout badly when the bubble burst, says top analyst”.

Senanayake goes onto say that government institutions such as the EPF, ETF, Bank of Ceylon and NSB investing in the CSE is good for the development of the market.

However he says they must behave like investors and not like “speculators” or “bureaucrats”.

Senanayake who is also an economist says investors of Government funds should act like the foreign funds and institutional investors who make their moves on fundamentals.

However he says if those government investors have done so, they would not have bought some of the shares they bought at such high prices.

He also adds that the amount of money invested should be what can be sustained on the basis of their revenue or income.

Senanayake cautions that if those institutions curtail their net purchases they may bring down the market.

He goes onto say that the stock Brokers promote high expectations on the basis of utterly optimistic projections for earnings in the future.

Senanayake says Stock market in Sri Lanka is driven by sentiment and liquidity.

He says If either of them changes dramatically, the market will do what Murtaza Jafferjee  Head of J B Securities has prognosticated in yesterdays www.news360.lk article which appears under the title of  “CSE on a bubble, will fallout badly when the bubble burst, says top analyst”.

Story by: Prasanna C. Rodrigo / contact him on: news360@sltnet.lk

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