The Current State of the CSE (Colombo Stock Exchange)

What people need to understand is this; unlike previous bull-runs of our lifetime, we have never seen one quite like this. The infamous “pump and dump” situation back in 2010/11 (soon after the minor recovery from the 2008 global recession) was exactly that — a pumping of money in selected stocks to bet against others and “artificially” increase prices before being the first to dump them on unsuspecting newcomers and small retail investors (all played by people who were left desperate and reeling from the ‘08 recession).

This one however, is different. It is not a pure gamble. Covid has presented opportunities for certain companies to make unbelievable profits. Expo, Dipd, RCL etc. are making more money than they ever thought possible. Because Covid has caused (at least for the foreseeable future), a global shift in commerce — control of imports/exports on the one hand, and a colossal demand for certain goods (causing a massive surge in demand for logistics and related services, not to mention the products themselves) on the other. Sri Lanka had companies with the right leadership, attitude, and talent to capitalise on these newfound opportunities — in turn, these companies became insanely more valuable. This CSE bull run then, is driven by people wanting to invest in such companies that can guarantee them a decent dividend, and capital gains from further appreciating share prices due to even higher profits and economies-of-scale going forward.

This is a textbook version of a healthy, sustainable bull run and we are nowhere near the end of it. The past few weeks have only been a temporary blip, giving us a quick opportunity to check our patience going forward; for it is the patient, who make it big, while the impatient fall by the wayside. Get back in and get back quick. This rocket was meant to soar…