SEC probing certain transactions on CSE

The Colombo stock market is behaving weirdly and wildly raising concerns that that the manipulation game has resurfaced with the market regulator fine-tuning its antennas.

Throughout this week there have been many rumours doing the rounds in the market with brokers and certain analysts saying some transactions were done to bring the stock market down.

Social media channels such as Twitter were on overdrive pointing out certain transactions and the blame game catapulted to another notch by Wednesday. Stockbrokers were saying that a lot of manipulation is happening in the market currently where certain high net worth individuals and their stockbrokers are bringing down fundamentally strong stocks in the hope that their favourite low- valued shares that were not moving during the past few weeks will start to move up. “But that didn't happen. It didn't go their way and the entire market suffered,” a stock analyst said.

Analysts pointed out that dollar income ear ning companies have shown exceptionally good results, but these shares are also being dumped by investors owing to the overall negative sentiment.

Meanwhile, the market regulator, the Securities and Exchange Commission (SEC) is probing certain transactions and social media statements, sources close to the SEC said. “The SEC has taken serious note of it and has even recorded statements from certain individuals,” a stock broker told the Business Times on Wednesday.

He said the market went to unprecedented highs and what is happening is a natural correction. “Investors are realising gains and it was bound to happen.”

The SEC on its Twitter made a comment regarding a certain transaction that the regulator has taken serious note of the matter and is presently looking into it as a matter of priority. ‘Appropriate action will be taken,” the SEC comment said further.

A stock market analyst noted that 10 to 15 prominent shares which bring almost 85 per cent off the market turnover exponentially increased in share prices by 10, 20, and occasionally 30 times within a comparatively brief period. He added that most market players were interested in these particular shares and were constantly trading them over the last few months. They were taken to heights beyond justification so much so that now there aren't any buyers for these stocks. “These shares had hit all- time high prices and now there is no liquidity beyond these prices. Therefore, there is no new cash coming into the prominent shares. The price appreciation to the highest level has happened and now the holders are shedding them.”

Analysts said that these prominent shares have come down by at least 25 per cent from their all-time high price.

Agreeing a stockbroker said that when one counter comes down the others follow.