Share trading halted soon after reopen from lockdown

Trading floor of the Colombo Stock Exchange (CSE) at the World Trade Centre was not opened for the public yesterday  

Pic by Pradeep Dilrukshana

• Trading continues only for 38 seconds as S&P SL20 fell 10%
• Analysts expect similar trend to continue today as well  
• Say it will take 3-4 days for stock market to stabilise 
• Massive selling pressure due to market closure plunges share prices  

By Nishel Fernando 
The Colombo Stock Exchange (CSE) yesterday closed trading in just 38 seconds when the market resumed trading following a 51-day break, with the S&P SL20 index breaching the 10 percent decline threshold amid the plunge in share prices, triggering circuit breakers.

The benchmark All Share Price Index (ASPI) closed 179.2 points down at 4,392.43 and the S&P SL20 index recorded a fall of 186.89 points to 1,760.53 from the previous close (March 20), in the shortest ever trading session of the CSE’s history.

The market analysts expect a similar trend to continue during the remainder of the week with selling pressure being materialised at once, due to the extended closure of the market and with the newly imposed circuit breakers of the Securities and Exchange Commission (SEC) in place.

“As the market closed today without realising the full selling pressure, this will continue tomorrow as well. The selling pressure is hitting at once because the market had been closed for a long time. 

However, we believe that the market will stabilise after three to four days,” First Capital Head of Research Dimantha Mathew told Mirror Business.

The pre-open session started at 10:30 a.m. yesterday with regular trading being limited to two hours, from 11:00 a.m. However, the trading was suspended 38 seconds past 11:00 a.m., as the S&P SL20 index fell by over 10 percent, breaking the newly enforced three-tier circuit breakers.

According to the latest SEC directive, market should be halted for 30 minutes in the event the S&P SL20 index drops by 5 percent and another 30 minutes, if the Index drops by a further 2.5 percent. 

If the Index drops by 10 percent, trading will be halted and the market shall be closed for the day.

As expected, there was very little buying interest in the market yesterday, to match the high selling orders, as most investors were on a wait-and-see mode. 

The total turnover yesterday was limited to mere Rs.24.89 million, with 4.4 million shares 
being traded.

John Keells Holdings, Sampath Bank and Commercial Bank, accounted for half of the ASPI’s fall while nine listed entities, led by Hemas Holdings, recorded 
positive gains.

Stockbrokers noted that there was a significant amount of pre-auction orders, a trend likely to continue during the next few days of the week.

“The market will somewhat stabilise in three to four days as there would be lesser and lesser pre-auction orders in place. Similar to today, we will see lot of pre-auction orders tomorrow as well. However, the selling pressure would continue to remain,” Mathew said.

Due to the three-tier circuit breaker, he noted that the ASPI could only lose up to 700 points during the next few days.

However, the CSE didn’t record foreign net outflows yesterday, amid weak buying interest. The foreign sales were limited to Rs.157,260 and foreign purchases amounted to Rs.753,924. 

In contrast, the locals were net sellers with domestic sales amounting to Rs.24.7 million and purchases only amounting to Rs.24.1 million.