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UNP warns of recession

8 August 2010 10:47 am - 21     - {{hitsCtrl.values.hits}}

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By Yohan Perera

The main opposition UNP warned that the transactions which take place in the stock market outside its fundamentals and investments made by the EPF violating its guidelines will lead to consequences right to the extent of a total economic recession in the country

UNP National list MP Dr. Harsha De Silva told said the sky rocketing boom which the CSC recorded recently was something which was achieved outside basic fundamentals associated with it.
 

He said the shares prices of some companies which were bankrupt had increased suddenly and added share prices have increased by 300 percent in the case of some such companies. In addition he alleged that investments in some unknown companies have also increased dramatically.
 

The UNP MP said the 10 percent limit which the government introduced will make the small scale investors to leave the market by selling their shares off because trading of shares of one company will be halted when the share price is increased by 10 percent or reduced by 10 percent.
 

“The CSE today has turned into a casino,” Dr De Silva said warning that this will lead the country into a total recession.. He made this point by recalling that the collapse of Wall Street led to the total economic recession in the USA.
 

Coming out with another staggering disclosure, the UNP MP alleged that the EPF which is controlled by the Central Bank(CB) had invested in several banks, violating the investment guidelines established by the CB itself. He explained that the EPF had invested in several private banks including the crisis stricken Seylan Bank violating the investment guide which prevents EPF from investing in banks.

Dr. De Silva charged that there is a serious conflict of interest in this approach as it is the Central Bank which sets interest rates while it is aware of all the inside information of these banks through its monitoring body on financial institutions .
 

In addition he said the EPF had also invested in a leading Colombo Hotel violating the guideline which says the fund can only invest in a blue-chip companies. 
 

The UNP MP alleged that these steps taken on financial investments are similar to Deputy Minister Mervin Silva’s action of tying a government servant to a tree.
 

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  Comments - 21

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  • SHEZAN Sunday, 08 August 2010 11:22 AM

    WELL SAID SIR. I AM A SMALL INVESTOR IN SHARE MARKET AND PLAN TO GET OUT OF IT DUE TO THE RECENT INTRODUCTION OF STUPID RULES- LIMITATION OF 10% PRICE BAND AND THE LIMITATION OF DAY ORDER.

    Asoka Lelwala Sunday, 08 August 2010 11:30 AM

    Dear Dr, Please keep us inform, Thanks

    Nilupul Monday, 09 August 2010 06:09 AM

    Dr. Silva's observations are correct and possible to occur in the future. Also I see another side of this. As it happened during the great recession in the US, perhaps this is a very well calculated event by few highly influential government members. As Dr, Silava predicted, small and medium investors will leave the market by selling their stocks at very low price, while government sponsored / backed up investors or even government members it self will buy them in large quantities with their black money. By doing this, they can white wash their black money while claiming ownership for huge number of assets in the stock market. After few months or may be years, they will re-regulate and market and stock market will catch-up soon and then they will sell their stocks, bought at dirt cheep prices by making multiple times than they invested.

    IrajCalifornia Sunday, 08 August 2010 11:44 AM

    good for you ..!!!

    Girigoris Sunday, 08 August 2010 11:59 AM

    Total agreement with this statement. This will lead to what is called a "bubble economy" where the share are overvalued. Then it drops thorough the floor. We may be heading for it as the share market seems to gain with any economic reasons.

    suwimal Monday, 09 August 2010 06:12 AM

    Happy news for pensioners! Interest rates would go up!!

    DXB Sunday, 08 August 2010 01:02 PM

    Dr. De Silva is not aware how Present international markets are moving , if he calls CSE is a casino , then present forex and comodiity markets should be called super duper gambling .

    Olden days fundementals are no more in the market.

    Mushi Sunday, 08 August 2010 01:54 PM

    Foreign investors will be looking at this statement closely and could impact foreign investment.

    Senior Citizen Monday, 09 August 2010 06:43 AM

    Already the market has dipped 200 points today. Harsha was right in what he said.

    siripala Sunday, 08 August 2010 02:04 PM

    What will happen to the SLR/USD forex rate if the stock market indices go down.?

    Charuni Perera Sunday, 08 August 2010 02:10 PM

    Why don't you join the government and rectify the errors for the sake of our beloved country?

    Edwardo Baltazar Sunday, 08 August 2010 02:18 PM

    Well Said Dr.....The economial norms are binded with a common mans comman sense. But unfortunately in our county the comman sense is not comman for all, even among the educated lots.....a pathetic situvation

    Mushi Sunday, 08 August 2010 02:37 PM

    I think, this person should take over as Governer of Central Bank. What is Cabraal doing?? Sleeping? No, he is playing to the tune of MR

    MK Monday, 09 August 2010 07:59 AM

    The CSE and the SEC immediately moved to correct in the situation at the stock exchange by bringing a 10% cap on trading. They are indeed taking corrective action on runaway speculative trading. Our economy is that dependent on the stock exchange as oppose to US where the NASDAQ is a very vital part in their economy. This professor should know better that our economy will not go into recession just because of this. Please stop lying to the public.

    MK Monday, 09 August 2010 01:30 PM

    Correction: our economy is 'not' that dependent on the stock exchange as as oppose to US where the NASDAQ is a very vital part in their economy.

    Geronimo Monday, 09 August 2010 03:07 AM

    No, Cabraal is a square peg in a round hole, and an empty head, that's all.Period.

    Asanka Monday, 09 August 2010 03:08 AM

    Can please telll me a one prediction of yours has become reality. you are a disgrace to UNP.

    MaPer Monday, 09 August 2010 03:25 AM

    Since 1994 the stock market has been going "down the pallang". Now its getting worse. With this type of situ no foreign investor is going to dump his money in Sri Lanka.

    Upul Monday, 09 August 2010 03:30 AM

    with all these hapaning aroun d him Cabral is a happy man,
    Why not??

    Jay Monday, 09 August 2010 05:03 AM

    Finally someone in the UNP who knows what he is talking about...he should be leading the UNP, not Ranil.

    Calistus Jayatilleke Monday, 09 August 2010 04:11 PM

    Try telling it to our genius Finance Minister, his deputy Minister and the Governor of the Central Bank!


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