Heavy trading in tourism sector shares

Harshini Perera

Hotel sector shares trading in the Colombo Stock Exchange (CSE) for the past few months gained unbelievable heights.

Some shares in the hotel sector went up by 5 percent, but the stocks in the hotel sector has not reached their over-value yet, Capital Trust Securities Director Sarath Rajapakse told Daily News Business.

"There are some hotel projects in the pipeline to get listed in the CSE. Many companies that invested in Jaffna are looking for listings in the CSE in the future" he said.

"Most companies involved in the hotel sector went for IPOs and Rights issues as they have seen the potential in the market. John Keells was the first to issue a public offering. Aitken Spence Hotels Holdings and Marawila Resorts have followed the rights issue in the hotel trade. In Sri Lanka, capital has been a constraint for the development of many projects. Earlier companies went for banks when in need of capital but today they turn towards equity funds," he said.

The keen interest in the hotel sector helped it gain higher than other shares. Many locals have invested in hotel shares. Indian investors go for direct investments in hotels. The investments from foreigners have not yet turned in the CSE.

"During the war period, the tourism industry was not catering to the local tourists but solely depending on foreigners. At present, many hoteliers are catering to locals as well as foreigners. This has resulted in the rapid upward movement of shares in the stock market. The past week has recorded the highest investment contribution to the hotel sector," Rajapaksa said.