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Revised trading hours fail to stop CSE collapse 

01 Apr 2022

 
  • ASPI hits a six-month low
  • Trades below 9,000, a fall of 4.21% from previous day
  • CSE revised trading hours to merely 2 hours yesterday and today 
  BY Shenal Fernando The 4.21% fall of the All Share Price Index (ASPI) observed yesterday (31 March), despite the restricted trading hours, saw the ASPI fall to a six-month low, descending below the 9,000 point level for the first time since 24 September 2021.  The Colombo Stock Exchange (CSE) announced yesterday, by a circular, that it would be restricting trading hours from 10.30 a.m. to 12.30 p.m. yesterday and today (1 April), due to the difficulties faced by investors and other stakeholders to access and operate the market as a result of the prevailing power cuts. Therefore, during the aforesaid two days, the pre-open session will be from 10 a.m. to 10.30 a.m. and the open auction will be at 10.30 a.m. as usual. However, trading, which will commence at 10.30 a.m. after the open auction, will be stopped at 12.30 p.m.  According to the CSE, this decision to restrict trading hours was taken after consultation with the Securities and Exchange Commission of Sri Lanka (SEC), having considered a request made by stockbroker firms to restrict trading hours, owing to the difficulties faced by investors and other stakeholders to access and operate the market as a result of the prevailing power cuts.  This decision to restrict trading hours was welcomed by investors who claimed that the decision to restrict trading hours could halt the fall of the market which has collapsed by over 33% since reaching its all-time high of 13,462.39 points on 19 January 2022. Despite this, the CSE continued to fall yesterday and triggered a CSE circuit breaker within eight minutes of the market being open. Accordingly, trading was halted at 10.38 a.m. after the Standard & Poor’s Sri Lanka 20 (S&P SL20) index fell by 5.0%.  During the two-and-a-half hours of trading yesterday, the ASPI fell by 391.02 points to 8,903.87 points, while the market turnover was Rs. 2.3 million with over 110 million shares traded. Similarly, the  S&P SL20 index had plummeted by 165.03 points to 3,031.16 points.  This marked the third consecutive day during this week where trading in the CSE was halted due to the tripping of the circuit breaker in terms of the SEC directive dated 30 April 2020 due to increasing investor concern over the prevailing energy crunch in the country which has resulted in the Ceylon Electricity Board (CEB) imposing 13-hour-long power cuts, and which is rumoured to increase further, going forward.


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