For the 5 people who have never gotten high, I will try to explain it. at first, before you are really high, you become really giddy and will laugh at the slightest thing. you also may remember random things and pointlessly share them. When you are high, it feels very much like your dreaming.
Colombo's stock brokers had a meeting with the president on Monday. Since then, their reports sound as if they have been written by an analyst on a high. The same can be said about some newspaper reports on the market as well. As for the participants of the Sri Lanka Equity forum, well they seem to have inhaled something stronger than even the most heavily stoned stock broker has. It is fitting then, that Bartleet Religare - one of the better grounded firms has described in the market as:
At times markets can act like a junky in need for a quick fix as the best of human emotions come into play.
The report, published in The Island, also goes onto state that:
"Speculative counters once again dictated trading as larger players sold shares to the general public and got out of their positions,"
At the start of trading today (30th November), it looked like the junkies had come off their high when both indices declined steadily during the first half hour. But then they got their fix. A rumour was put forward that the SEC had finally agreed to allow brokers to lend upto 300% of their net capital (recently the SEC allowed them to lend upto 100% of their net capital) it's also rumoured that each client will be allowed to borrow upto 70% of his portfolio instead of the current 50%
It is hard to believe that it is the same SEC that acted swiftly in the middle of last year to avoid a credit fueled bubble. Let us hope that the rumor is a plant. Either way, it may be too late already.