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Stockbrokers mull consolidation

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Stock brokering firms are now feeling the pinch owing to the lull in stock market whose average daily turnover has drastically dropped by approximately Rs.800 million since the beginning of this year, market sources said this week.

The drastic drop in daily turnover at the Colombo Stock Exchange (CSE) has now resulted in stockbrokers mulling possibilities of consolidation, President Colombo Stock Brokers Association (CSBA), Dihan Dedigama told The Nation Gain.

Market sources revealed to The Nation that the unstable political situation and the lack of a government policy had resulted in the poor performance of the stock market, resulting in stockbroker firms vying for measures to manage the losses incurred. Dedigama said that stock brokering firms have already begun to look at consolidation as a primary option owing to the poor performance.

The daily turnover at the CSE dropped from an average of Rs.1.4 billion last year to an average of Rs.300 to 400 million this year. Dedigama stated that the low performance was likely to continue until the General Elections later this year, after which it was expected that the political situation would stabilize.
However, market sources stated that stockbrokers would not benefit through consolidation as most of the companies had faced losses.

In addition, sources revealed that the halting of several construction projects had resulted in the drop of share prices of several construction companies.
Further, market sources also revealed that the imposition of one off taxes such as Super Gain and telecommunication taxes had resulted reduced the share prices of the respective companies and warned that it would affect shares of other companies as well.

“We cannot do anything at the moment. Almost all the stock brokering firms are affected. We have to wait until the elections are over for the political instability to cease,” Dedigama said.

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