By Granville Perera –
Many thought that the regime change would be the harbinger of prosperity – a thriving economy, a buoyant stock market and a flood of foreign investment. Two months into the “utopia” of change, the reality is far from that envisaged.
The stock market, prior to the election stood at a modest but stable 7300 points. All sentiments were that a bull run would soon ensue with the market witnessing an unprecedented gain. This clearly never materialized, and a closer analysis sheds some light into this disappointment.
Firstly, what countless investors failed to appreciate was that the market was in fact overvalued. Although a market PE of 19 of all the companies comprising the market were, all in all, hyped. The speculative investments that fuelled such an inflated valuation have now simply run out. Thus, it came as no surprise that the market did not rally as anticipated.
Secondly, another formidable shackle on the market is the budget proposals put forward by the current regime, which have done little to muster up business and investor confidence. More importantly, the move to collect 50 billion from the top most companies in the market has irked many investors and analysts. This policy has, no doubt, boomeranged and the stocks of these companies are in the doldrums. The market, disappointingly, stands at 7000 points today – a far cry from the much foretold “Bull Run”.
Overall, it is no exaggeration to say that the policies presently in force have reduced a staggering 200 billion in terms of market capitalization – all this in an ill-thought attempt to muster 50 billion in revenue! Such proposals clearly contribute to forestalling the resurgence of our once thriving market.
Finally, it is an often heard saying today, in the brokering and investor community that the market regulator is currently on a path of vindictive reprisal, in an effort to drive home “a lesson” to all market participants. Such rhetoric by the regulator instils unwarranted fear which keeps all investors away.
Thus there is no speculation in the current market. It is trite knowledge that a degree of speculation is necessary for a healthy market. Speculation is not manipulation. This distinction must be made clear. Speculators, simply look for opportunities where significant price movements are likely.
All speculators have now resigned themselves from the market in trepidation of the regulator. Yes, market malpractices must be clamped down upon and those responsible penalized, but instilling a fear psychosis is counterproductive. Regulation of the market on mere gut sense, sans professionalism and experience, may do as much damage to the market as market malpractices.
The way forward is for the government and the regulator to follow a non-interventionist policy and allow the market forces to find its own equilibrium. Let the forces of demand and supply interplay to bring about stability and the gradual revival of the market. Laissez faire should be the key word at play.
The much-publicized rhetoric of bringing the manipulators of the stock market is a forgotten slogan. The 20 most wanted men are continuing to have a field day, and no one has even attempted to question them. This again is yet another Yahapalanaya pledge that has been dishonoured. Is this an attempt by the authorities to allow the manipulators to continue their manipulations and destroy the market as well as the naïve small investors? Failure of the Sirisena-Wickremesinghe administration to act decisively will ensure that the expected Bull Run would only be a pipe dream.
The call for the resignation or temporary withdrawal of the Governor of the Central Bank Governor, Arjuna Mahendran to ensure a free and fair inquiry in to the investigations of the controversial Treasury bond issue, where his Son in Law has played an important role is justifiable by any yardstick of Yahapalanaya. The long-standing relationship between Charlie Mahendran, Arjuna’s father and Ranil Wickremeinghe, our Yahapalanaya Prime Minister would be put to the biggest test with the decision of the President to appoint his committee to investigate this scandal. It is rumoured that 3 billion has come out of a state bank for this transaction. Who could have access to this kind of financing from a state bank without political or other patronage? Its testing time for Yahapalanaya and it is important that any wrongdoing is investigated and nipped in the bud, immediately.
Samuel jayweera / March 13, 2015
This is not a disaster-They will investigate it accordingly.
Nobody is perfect. But the manner MR regime looted and ruined the tax payers funds will be revealed to the entire world soon. Now with no shame at all, former Prez MR dares to insist public that it was India and other internationl allies supported his recent defeat still being unable to come out the deep pit he is fallen in even todate. The gravity of corruption directly handley by him and his oligarchs are no means comparable to any corruption cases in the country sofar. Even chinese diplomatic personnels dare today to attack ruling ministerial fellows, since MR and his adminsitration allowed China to abuse lankens without any respect. MR and his way of politics can only make it worse for the war torn island nation if any honest leaders would not take over the job
/
Supun S / March 13, 2015
Wrong is wrong whoever does that Samuel. According to you, wrong is right when Ranil does and even the right is wrong when MR does that. What a childish way of thinking. Take out your political spectacles and see things as they are.
/
sama / March 13, 2015
Can anyone with a brain the size of a needle head agree with you – with the numerous abuses had been carried out by MR and the bunch ? It is not RW made it… it ws the adminisration. that can also happen in Europe. But well planned mafia frauds mapped by MR et al were deliberately made. Come ahead of us you will see it clear. YOu will not need to magnified glasses – reality of Mahinda et al will become clear- once the investigation being carried out will have expose every things aobut them AND their real far abusive nature soon.
/
Patriot / March 14, 2015
Sama and Samuel, your anger with MR, (whilst unashamedly enjoying the peace and economic development achieved by his Government), should not colour your judgement and risk destroying Sri Lanka’s hard achieved gains.
Without exaggerating wrongs of the past(where Maitripala Sirisena nor Ranil and company, were innocent bystanders), why wont you support Yahapalanaya principles and engage in constructive criticism to stop possible mega fraud taking place in front of our eyes and also stupid decisions being taken to stop ongoing mega projects to please foreign nations and spite MR.
Supun is perfectly right to say wrong is wrong whoever commits it, and we must not close our eyes to allow Maithri and Ranil to practice their version of negligence, brinkmanship, nepotism and corruption.
/
kirthi gamage / March 13, 2015
Make a note of this. Investigations will never realize. MRs will not be charged for anything.
/
jayasingha / March 13, 2015
We are discussing present CB governor and not former President MR. Sirisena is a puppet dancing to Ranil pulling the strings. Mahendrans are not down to earth Sri Lankans and are not interested in the country but their personal benefits. Ranil does not have ground realities and that is why he cannot find people outside his own circle of friends for important appointments.
/
Vinodh / March 13, 2015
Hellooooooooooooooooo……….. Who said Ranil is Mr. Clean???? He too has enough
rogues around him !!!!!!!!!!!!
/
Salvation Army Commander / March 14, 2015
……….. Who said Ranil is Mr. Clean???? Don’t forget he is also Mr Bean.
/
Salli Karaya / March 13, 2015
Getting Rs. 3 bn financing is not a big deal from a bank which has over Rs. 1,250 bn in assets. Even the UPFA MP, Siripala Gamlath, has obtained a massive loan from this bank without adequate security. I often wonder where these people, who are crying about the lack of Yahapalanaya now, had misplaced their voice-boxes when the previous CBSL Governor, Mr. A.N. Cabraal, was allowing the Rajapaksas to bypass Parliament on many payments by routing them through the CBSL, even though they had nothing to do with the CBSL. If we start opening that can of worms, we can use the word “Kunupaalanaya” to describe the previous regime. This regime can, at the very least, be called “Saamanya-paalanaya”
/
Patriot / March 14, 2015
Sallikaraya, you may not have understood what was fishy with the 3 billion state bank loan, which I wont get and you may not get.
When the Central Bank sold 30 year bonds worth 1 billion for around 9% interest, and if a state bank gives me 3 billion and I offer it to the Central Bank at an heavily inflated interest of 12+ per cent interest, which my Father in Law the CB Governor accepts in its entirety, giving me a mega profit, then is there something drastically wrong? In the past no one offered in a single offer something more than the initial value of the Bond sale.
Even so, don’t drag possible past wrongs to ignore current wrongs. Two wrongs do not make a right. Let us grow up.
/
janendra ariyathilake / March 13, 2015
Since when did central bank took charge of government payments. Dear sir please note that the central bank is never involved in government payments whether the expenditure are legitimate or illegitimate.
/
upali Wijewardene / March 13, 2015
What a fools paradise you live in. Cabraal should have only been a cab driver and not a limousine driver as MR planted him to be. For MR in his first term, he had no good people and Cabaraya was the only option he had.
/
Paul / March 13, 2015
In this day and age , communication need to economic and efficient and in achieving this goal every syllable counts. Just like CT and it’s loyal readership coined MaRa to address the ex President, here are some more:
YaPa= Yahapalanaya ;
[Edited out]: Mangala S;
Sira or My3: Cuurent temporary President;
Rani: Current unelected PM;
Hera: Former president- god knows what her current role is.
/
dingiri / March 13, 2015
“Many thought that the regime change would be the harbinger of prosperity – a thriving economy, a buoyant stock market and a flood of foreign investment.”
I dont think anyone was so delusional. “Prosperity and a thriving economy” in just two months? How on earth might that be possible? You cannot create wealth by waving a wand.
What we voted was for more accountablility. A stop to mega corruption. The violation of our natural resources and cultural heritage by hotelliers and treasure hunters with connections. An independent and accountable police force. These things will gradually result in prosperity but no one expected to wake a millionare next day or even the next month.
/
Vibhushana / March 13, 2015
I don’t think CBSL Governor position is tenable any longer. The finance minister should also step down.
/
Citizen Perra / March 13, 2015
The Minister in Charge of the Central Bank under the current setup is the Prime Minister and not the Minister of Finance. So are you asking the Prime Minister to resign over this?
/
Douglas / March 13, 2015
Every time an election comes, the ordinary folks, the voters are taken for ride by the politicians with such master minded terms, such as “Dharmista Samajaya”, “Chinthanaya”, “Yahapalanaya” etc. But at the end of the day, when the politicians get elected and settled down to do the task of governing, their own kith and clan, come out of hiding and start the “game playing”. The politicians completely forget what they have been preaching and promised and encircled by their relatives, school and class mates, associates commence the task of plundering the national resources. This scandal of “Bond Issue” is yet another many matters that have been happening during the last 59 days of Yahapalanaya. Of course, this was not a surprise , because, Ranil & Co was a “tested” team and for anyone to expect “change” and rely on Yahapalanaya is a mirage. As one example, just look at the “TEAM” he has appointed to resurrect the biggest loss making state venture; Sri Lankan Airline. Who are they? Unfortunately, the present President too has not been able to muster a reliable, efficient and a true patriotic team within his domain to “nip in the bud” some of the most glaring incidents of mismanagement that are being taking place.
So this rot will continue, until the voters get a hang of things and say enough is enough. It is left to the young “Voters” of the enlightened to come forward and get rid of all these vultures and hand over the administration of our national resources to some reliable and resourceful team and comprehensively “MONITOR” the activities and steer the country away from this disaster taking place.
/
Sylvia Haik / March 13, 2015
We do not have enough investors to make our Stock Exchange (CSE) a bouyant market. It appears a constant game of wheeling and dealing between a select coterie more akin to a second hand car dealership. Our CSE is quite young and we should be bold enough to seek expertise advice from elsewhere to put our house in order. We should do our utmost to attract the foreign investor besides the unrestricted currency transfer, which only benefitted the unscrupulous and not the genuine investor as very few companies made significant profits. There were murmurs of the Initial Public Offerings (IPO) being regulated for realistic pricing but that appears a pipe dream. Almost all the IPO’s launched in 2011 onwards are today trading at much below the IPO price. I cannot understand the restrictions on how the monies in the Special Investment Account (SIA) is spent as they are already free to be converted and sent abroad. My request to pay monies from my SIA account to a relative was denied under an SEC Directive issued in June 2013 but I could however pay into my NRFC account in British Sterling and pay my relative from there, sustaining two sets of conversions. This is plainly ludicruous.
/
T Wickramaratna / March 13, 2015
Wrong done by the previous regime is no excuse for the present set up to do under hand transactions.
/
Roy / March 13, 2015
Do you want the government to borrow more what MR did to fool the people.
Granville Perera, for ex: can a man in heavy debts become a millionaire in two months…
/
upali Wijewardene / March 13, 2015
Yes, Arjun Mahendran style. Son in Law made a cool 1.6 Billion
/
Dammika / March 13, 2015
Whoever the writer of this article …. and others MUST realise that the whole country was ruled for 10 or more years by a bunch of crooks and rogues including the big boss and his family. Many ordinary people to expect changes fast fair enough because they suffered a lot. But others are trying to pull the legs to bring this govt down. We all must realise this 100 days guide line to bring quick relief & assistance to people. Of cause there are certain issues may not meet the deadline. We must be patient as people were patient enough for a long time to topple previous regime. To correct all those wrong doings overnight is not that easy. So please bear sometime and must help them to find the crooks. Also must not allow those rulers not to come back to power
/
Citizen Perra / March 13, 2015
Fine. Let the crookish previous administration never come again. However, if within a matter of 60 days some bad egg of the present administration does an underhand deal of this magnitude and if the Governor does not step down even temporarily fellows are bound to extrapolate and say that present administration is squandering so much of money every sixty days. If the Governor promptly steps down, even temporarily, then we can think of giving some breathing space for the present lot.
/
Fazeel Hussainl / March 13, 2015
What happened to the stock market racketeers, Dilith Jayaweera, Dinal, ?????
/
Sylvia Haik / March 14, 2015
i remember during the mushrooming of stock price manupilations the desultory actions the Stock Exchange took was to limit the price change to 10% which did practically nothing and dropped. However, at this time there was software developed to detect precisely the price manupliations and was being trialled in Thailand and my request for our own Stock Exchange to try it was ignored. Perhaps because as I now realise the crooks doing the price manupilations were those already in high office.
/
maheshi Perera / March 13, 2015
If the CB governor doesn’t resign, the PM should. What a disgrace that his nominee in thirty days has proved to be having Rajapaksa blood.
/
Ram / March 13, 2015
” The way forward is for the government and the regulator to follow a non-interventionist policy and allow the market forces to find its own equilibrium. “
We saw where that led in the Western nations. We are still recovering from the criminality that resulted.
/
Kumar Sandirasegaram / March 14, 2015
Ranil failed to act due to his friendship with his family no wonder Ranil was rejected by the electorate. This is a sensitive post as the incumbent must be seen to be super clean. His failure to declare an interest is a serious breach of banking and financial rules. The perception of the Governor is an important tool to maintain’s the Banks reputation internationally. His position is untenable and he needs to go. Ranil should ignore his links to the family and do the right thing and sack him. We must not compare good standards by the behaviour of the last regime and its tentacles.It is imperative that we establish honesty integrity in our professional life’s in Srilankaonce again. We do not need an investigation to dismiss this person from this position in Srilanka.
/
K.A Sumanasekera / March 14, 2015
CSX is totally Elite territory.
Elite must feel gutted that the expected Bull Run as become a Bear pit.
Mega Infrastructure like Toll Expressways, Airports, and Harbours are the darling of the Overseas Pension Funds.
UNP which is supposed to be the Darlings of the West, who portray them as the best free market managers rubbished these assets which the previous Govt built .
Just to make political mileage and dupe the inhabitants, most of who knew nothing about share markets.
Elite went along because they even didn’t understand the workings of Share Markets in this day and age, where most of the Funds are from Investment Banks looking for e a quick buck and Pension Funds.which look for long term returns’.
Dr Harsha frightened the hell out of both, by his foul mouth Big Time corruption allegations, and silly threats to dismantle our valuable Infrastructure which would never have been built with the Western help.
I hope the Bears will run even faster and wipe off the Elite from the register so that they get a lesson in how the Politicians make or break markets.
/
P R Kotalawela / March 14, 2015
The appointment of Mahendran as governor of CB is an insult/snub to our competent,capable,honest academics and intelligentsia. An inquiry is a utter waist of time. The fraud is so obvious. Ranil’s appointees for the inquiry is a joke, do not insult the intelligence of the people.
To those like Dr Harsha, Eran W,Sujeewa,Arjuna and many others honest politicians do not get corrupted by Ranil. Look for guidance to President Sirisena,for he is a decent honest man.
/
upul jayasuriya / March 15, 2015
The tragedy of the Maithri -RW government is that the same lot has managed to creep in through political connections.Unless the duo address this, they are doomed. maithri can become a lame duck president under Mahinda Rajapaksa and imagine what MR would do to all the people who betrayed him.
/