S&P enters Colombo bourse; minor tiff with the CB
View(s):International rating agency Standard & Poor’s (S&P) entered the Colombo bourse on Tuesday, at the same time getting into a minor tiff with the Central Bank (CB) over technicalities in a rating announcement.The S&P Sri Lanka 20 (S&P SL20) index representing the Colombo Stock Exchange (CSE)’s largest 20 stocks was launched in Colombo in what is seen as an attempt to stimulate and bring confidence to foreign investors.
The stocks were picked by market capitalization meeting minimum size, liquidity and financial viability. It is also the first initiative recommended by the Mckinsey Consulting Group hired by the CSE last year to develop an action plan to improve the capital markets. The developments came just as an S&P rating announcement on ‘high banking risks (in Sri Lanka)’ drew a strong rebuttal from the CB, resulting in a clarification of its (S&P) comments from the agency.
Krishan Balendra, Chairman CSE noted that the main reason to introduce such an index was to have a globally recognized brand which will give credibility to the index, in particular to large foreign investors. Alka Banerjee, Vice President, S&P Global Equity and Strategy Indices at the index launch told media that it is a good time to have an index based on globally accepted principles in Sri Lanka. Analysts said that the trading surge on Wednesday morning was mainly due to the introduction of this dedicated index, which will run alongside the All Share and the Milanka units.
The index comprises Commercial Bank, John Keells Holdings, Bukit Darah, Hatton National Bank, Carson Cumberbatch, Sampath Bank, Ceylon Tobacco, DFCC Bank, Aitken Spence, NDB Bank, CT Holdings, Distilleries, Hayleys, Chevron Lubricants, Dialog Axiata, Cargills (Ceylon), Aitken Spence Hotels, Nestle, Asian Hotels & Properties and Sri Lanka Telecom. Surekha Sellahewa, CEO CSE said that all these shares are classified according to the Global Industry Classification Standard (GCIS) which is an industry classification system, developed by S&P in collaboration with Morgan Stanley Capital International.
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