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» ඩොලරයේ විකුණුම් මිල රු. 164 ඉක්මවයි
Yesterday at 2:42 pm by yellow knife

» BLI.N0000 ( Bimputh Finance PLC )
Yesterday at 10:47 am by yellow knife

» UAL.N0000 ( UNION ASSURANCE PLC )
Sun Sep 16, 2018 6:13 pm by Senarath67

» අනං මනං! #/+?.<>
Sun Sep 16, 2018 11:31 am by Yin-Yang

» CAL Securities Facilitates First Cross-Border Share Transaction by a Sri Lankan Stockbroker
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» මහ බැංකුව රු. බිලියන 60 ක බැඳුම්කර විකුණයි
Fri Sep 14, 2018 12:48 pm by Ethical Trader

» ඩුනාමිස් කොටස් මිල 90% කින් ඉහළට. වැඩි අයිතිය ජනශක්ති අත්පත් කර ගනී
Fri Sep 14, 2018 7:49 am by serene

» නිදහස ලැබීමෙන් පසු රු. ට්‍රිලියන 1.9 ක වැඩිම ණය ආපසු ගෙවීම මෙම වසරේ දී – මංගල
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» ණය අපසු ගෙවීමට අඩු පීඩාකාරී ප්‍රතිපත්ති විකල්ප පවතින්නේ නම් සමාජ වියදම් කපා හැරීම නොකළ යුතුයි – UN විශේෂඥයා පවසයි
Wed Sep 12, 2018 6:14 pm by Ethical Trader

» Banking Sector Outlook-
Wed Sep 12, 2018 8:17 am by serene

» Dividend Announcement
Tue Sep 11, 2018 7:45 am by serene

» Sri Lankan central bank rejects currency crisis report
Tue Sep 11, 2018 7:31 am by serene

» LOFC Initiating Coverage - STRONG BUY - 29 03 17 - FC Research
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» අසාමාන්‍ය කොටස් මිල උච්ඡාවචනය ගැන MTD Walkers කරුණු පහදයි
Wed Sep 05, 2018 6:26 pm by Ethical Trader

» ශ්‍රී ලංකා රුපියල
Wed Sep 05, 2018 6:24 pm by Ethical Trader

» සුමල්ගේ සමාගමට කැබිනට් අනුමැතිය. රුපියල් බිලියන 2.7 ක නිවාස ව්‍යාපෘතියක්
Wed Sep 05, 2018 6:22 pm by Ethical Trader

» ධම්මික ලංකා සෙරමික් සභාපති ධූරයෙන් ඉල්ලා අස්වෙයි
Wed Sep 05, 2018 2:26 pm by nihal123

» Sri Lanka car registration up in July, tax not yet hit
Mon Sep 03, 2018 5:14 pm by Ethical Trader

» 2018 මාස 08 කදී කොළඹ කොටස් 4.54% කින් පසුබසී
Mon Sep 03, 2018 5:11 pm by Ethical Trader

» Sri Lanka rupee ends steady, stocks flat
Mon Sep 03, 2018 7:26 am by The Invisible

» Sri Lanka's August inflation in Colombo hits 5.9-pct
Mon Sep 03, 2018 7:24 am by The Invisible

» ජනාධිපතිවරණයට තවත් අපේක්ෂකයෙක්. සුමල්, ධම්මිකව යෝජනා කරයි VIDEO August, 30, 2018
Mon Sep 03, 2018 7:22 am by The Invisible

» Pictures & Stories ........
Sat Sep 01, 2018 6:57 pm by malanp

» සිංහ රෝහලට අසාධ්‍යයි
Fri Aug 31, 2018 7:56 pm by nihal123

» මාස 06 කදී වෙළෙඳ හිඟය ඩොලර් මිලියන 5,700 ඉක්මවයි
Tue Aug 28, 2018 8:01 pm by spw19721

» Billionaire Ashok Pathirage controlled Asiri Health to launch an MBBS degree Program
Tue Aug 28, 2018 5:26 pm by Ethical Trader

» දිගින් දිගටම වැඩි වෙමින් ඇති උද්ධමනය ගැන ආර්ථික විශේෂඥයින් අනතුරු අඟවයි
Mon Aug 27, 2018 11:47 am by Ethical Trader

» මැල්කම් ටර්න්බුල් පහකිරීමෙන් පසු ඕස්ට්‍රේලියාවේ අගමැති ධූරයට ස්කොට් මොරිසන්
Fri Aug 24, 2018 6:06 pm by Ethical Trader

» Sri Lanka rupee opens at new low, stocks gain 0.15-pct
Fri Aug 24, 2018 5:55 pm by Ethical Trader

» Sri Lanka's John Keells fine-tunes hotel strategy
Fri Aug 24, 2018 5:53 pm by Ethical Trader

» Sri Lanka's The Finance struggle to recover Ceylinco assets
Fri Aug 24, 2018 5:51 pm by Ethical Trader

» Sri Lanka increases planting subsidies for rubber
Thu Aug 23, 2018 10:34 am by The Invisible

» Sri Lanka eyes Euro, Yen and Renminbi bonds to cut costs
Thu Aug 23, 2018 10:33 am by The Invisible

» Sri Lanka to start first boat service in Colombo canals with navy
Thu Aug 23, 2018 10:32 am by The Invisible

» ලොකුම සමාගම් ලැයිස්තුව අලුත් වෙයි. ජෝන් කීල්ස් අභිබවා CTC අංක 1 ට
Thu Aug 23, 2018 8:41 am by Ethical Trader

» යෙන්, යුවාන්, යූරෝ බැඳුම්කර අලෙවියට ආණ්ඩුවේ සූදානමක්
Thu Aug 23, 2018 8:39 am by Ethical Trader

» හැරී ගේ මීළඟ ඉලක්කය
Wed Aug 22, 2018 5:23 pm by Ethical Trader

» Sri Lanka pension fund to value hotel stake eyed by HPL Hotels
Wed Aug 22, 2018 11:29 am by The Invisible

» Sri Lanka's Hemas Holdings profitability seen improving: Fitch
Wed Aug 22, 2018 11:27 am by The Invisible

» Sri Lanka's LMF to invest Rs2bn in new dairy farm
Wed Aug 22, 2018 11:26 am by The Invisible

» Sri Lanka’s national inflation accelerates to 3.4-pct in July
Wed Aug 22, 2018 11:23 am by The Invisible

» Sri Lanka rupee ends at new low, stocks flat
Wed Aug 22, 2018 11:22 am by The Invisible

» Elsewhere vs SL : Honesty, Social responsibility , Word twisting and Decency
Tue Aug 21, 2018 11:00 pm by Expert

» මහජන බැංකුවෙන් ජෙහාන් ගේ සමාගමට දුන් රු. බිලියන 10 ගැන මහ බැංකුව මෙසේ කියයි
Tue Aug 21, 2018 9:26 pm by Rana

» මැරියට් ආයෝජනයෙන් ඉවත් වන්නේ ප්‍රමාණවත් ප්‍රතිලාභයක් ලැබුණොත් පමණයි – EPF අවධාරණය කරයි
Tue Aug 21, 2018 6:07 pm by Ethical Trader

» Sri Lanka to charge 7-pct tax from banks on added value
Mon Aug 20, 2018 5:51 pm by Ethical Trader

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Mon Aug 20, 2018 5:49 pm by Ethical Trader

» Sri Lanka's EPF delay holding up hotel sale: East West
Mon Aug 20, 2018 5:49 pm by Ethical Trader

» Sri Lanka hotel room price controls not removed: Minister
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Mon Aug 20, 2018 5:40 pm by Ethical Trader

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Only Sri Lanka’s top five stockbrokers profitable

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Only Sri Lanka’s top five stockbrokers profitable

Post by Backstage on Mon Nov 27, 2017 10:22 am


Only Sri Lanka’s top five stockbrokers profitable

Out of the 29 stockbrokers operating at the Colombo Stock Exchange (CSE), only the top five are profitable, the next 10 may be breaking even while the rest are full of woes, market analyst say.

Some stockbrokers are closing their outstation branches in a move to cut costs and manage bottom-lines and some who boasted over 25 branches have cut this number by four fold to end up at just five, they say.

While the broking companies are faced with several serious issues with strapped cash flows, some firms are shedding staff. The Securities and Exchange Commission (SEC)’s new rules in capital adequacy which direct the implementation of a risk based Capital Adequacy Requirement (CAR) of 1.2 times the risk requirement of stock brokers subject to a minimum liquid capital requirement of Rs. 35 million is also curtailing their operation, they said.

Broking firms have cost cuts on many items since the crisis in the CSE nearly three years ago, but to no avail. It’s hard to rally in profits and some new firms are selling their licenses.

At least three firms are in the market for sale, according to analysts. Some others who are chugging along had hinted at reintroducing margin credit, but the SEC is firm on not doing so. Margin credit is to extend credit facilities to clients in broking firms through margin providers registered with the SEC.

“In the wrong hands margin credit will be disaster and it’ll be a repeat of the 2011-2013 era,” a SEC official said.

They said that some run their branches on CSE premises which are subsidised by the CSE. “Branches at Matara, Kandy, Kurunegala, Negombo and Jaffna are highly subsidised. They pay a minimal rent only and no utilities,” a CSE official said. But this isn’t enough, many in the industry say.

“There should be a stronger pull to attract retailers, otherwise many firms in the trade will sink,” a CEO at a broking firm added.

The CSE insists that the market continues to trade at a discount compared to regional peers and offers further opportunities for investors – with a market price to earnings (P/E) recorded at 10.99 as of the end of October. “The market has also continued to attract foreign investment throughout 2017 with Rs. 98 billion in foreign buying contributing to a net foreign inflow of Rs. 19.6 billion year-to-date, a figure that is substantial compared to foreign activity in 2015/16. 2017 also recorded an all-time high for foreign investor buying recorded in the first half of a calendar year,” the CSE said in a statement earlier this month.

While acknowledging all this, brokers reiterate their issue lies with the retailers. To be fair by them, the CSE tries hard.

“The CSE through its market development activities has embarked on an awareness drive in 2017, reaching out to multiple investor segments around the country and in international markets. Such efforts have seen the CSE work with the SEC on ‘Invest Sri Lanka’ investor forums in the US, Australia and New Zealand in 2017 and an island-wide local retail investor focused Investor Forum campaign to create awareness on stock market investment. The CSE branch network has also conducted over 500 educational programmes so far in 2017. In addition, CSE and the Colombo Stock Brokers Association is also presently conducting a series of events presenting investment research on companies featured on the S&P SL 20 Index, to an exclusive audience of Local Institutional Investors,” the CSE statement said.

It added that the Benchmark All Share Price Index (ASPI) has made a 2.78 per cent gain in October alone and a 6.31 per cent gain year-to-date, while the S&P SL 20 index, which features the CSE’s 20 largest and most liquid stocks has also improved consistently, making a 5.74 per cent gain in October and a 11.50 per cent gain since the start of 2017. “The positive growth of the indices mark a reversal of the declining trend recorded in 2015 and 2016, during which the ASPI recorded a decline of 5.54 per cent and 9.66 per cent, respectively. The performance of the market has also resulted in an improved involvement among investors, where the Daily Average Turnover is recorded at Rs. 943 million year-to-date, which is a 28 per cent increase from Rs. 737 million in 2016.”
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