Market analysts express mix of support for regulatory action

Market analysts in have expressed a mix of support for the regulatory action and concern over the potential impact on investor confidence following the Colombo Stock Exchange halting trading of WealthTrust Securities Limited having observed unusually high prices of certain transactions due to market orders being matched with these unusually high sell orders.

WealthTrust Securities Limited commenced trading on Diri Savi Board on January 7. The CSE, with the concurrence of the Securities and Exchange Commission (SEC), stated the primary reasons for the halt were to ensure a fair and orderly market, protect investors and preserve market integrity.

Analysts and brokers provided varied commentary on the incident . Many acknowledged that market halts are a predefined, well-coordinated measure used by exchanges worldwide to mitigate sudden, extreme price movements, and the CSE acted swiftly to contain the issue.

Head of Investment Banking, Asia Securities, Hasantha Uswatta said that it was an unfortunate incident but added that the market had picked up the following day as there wasn’t much of negative perspectives about the incident. However, some analysts warned that the “unprecedented fiasco” could be a major setback for local and foreign investor confidence.

“Repetitions of market halts in the future could send negative signals to the investor community leading to bearish market with low investor sentiments,” market analyst Suranga Wijesekera said. Since this will result in a significant systemic risk to the market, the CSE with the concurrence of the Securities and Exchange Commission of Sri Lanka imposed a market halt at 9.54 a.m. and cancelled all orders and transactions carried out till that time to ensure a fair and orderly securities market.

Source: Sunday observer