ASPI hits fresh all-time high surpassing 11, 000-point mark

• Comes just a day after CSE announced plans for float-adjusted market capitalization  
• Illiquid shares continue to be at play, propping up ASPI

The Colombo Stock Exchange’s (CSE) benchmark All Share Price Index (ASPI) surpassed 11, 000 points for first time yesterday and closed at 11, 008.33 largely due to increased investor play on illiquid shares, which the CSE said would be dealt with early next year.

ASPI gained 255.51 points or 2.38 percent yesterday, while the more liquid S&P SL20 index gained 8.47 points or 0.24 percent to close at 3, 606.85.

Following board approval, the CSE on Monday announced plans to revise the index calculation methodology of ASPI from full market capitalization-weighting to free float-adjusted market capitalization-weighting with effect from January 2022 following consultations with stakeholders. 

Traders and investors at the Colombo bourse have taken a special liking towards the shares of some LOLC group companies, some of which have less than one percent public float, which has helped to push the benchmark index up at the current levels. 

For example, LOLC Finance PLC, which has little over 5 percent public free float generated a turnover of Rs.3.6 billion yesterday, out of the total market turnover of Rs.10.2 billion, amid increased investor play. 

As of yesterday, five LOLC group companies, including the holding company, were among the top 10 highest market capitalization companies on the CSE, with Commercial Leasing and Finance PLC, being the number one market cap company with a free float of less than 0.5 percent. 

With the introduction of float-adjusted methodology to calculate market cap, this could change significantly, though the CSE said the “revised index will start moving from the same value that it closed on the day immediately prior to the changes.”

“…when this methodology revision is implemented, the serial continuity of the index will be maintained and there will be no sudden shift of the index level solely due to the launch of the new index,” the CSE statement issued on Monday said.  

“The mindset of investors, both retailers and some high net worth investors seems to be to push the ASPI as high as possible before the revision is implemented,” a stockbroker on the grounds of anonymity told Mirror Business.