CSE and SEC target local and foreign investors, says CSE marketing head
View(s):As the Sri Lankan economy takes an upward turn, with economic growth being at 7.5 per cent over the past four years, macroeconomic indicators signal an ideal environment for investment, with bank interest rates at an all-time low, the investment atmosphee is idyllic for prudent and well informed investors, a media release issued by the Colombo Stock Exchange stated.
“It is important to understand the long term nature of capital market investment and the cyclical flow that it follows. If one looks at the indices right now, one is able to see the positive growth trajectory of the market. The ASPI has crossed the 6600 point mark and the S&P SL20 was recently at the highest since its launch, indicating that the stock market is now on an upward turn based on valuations and fundamentals,” CSE’s Head of Market Development Niroshan Wijesundere said.
File picture of a CSE awareness seminar.
Taking into account this ideal investment environment, the Colombo Stock Exchange (CSE) along with the Securities and Exchange Commission (SEC) and other stakeholders have taken steps to develop the capital market, with a new strategic direction adopted since 2012. Under the CSE’s 3-year strategic plan and the SEC’s 10 point plan, the CSE has embarked on a steady phase of growth and these efforts are now coming into fruition. The CSE and SEC have taken bold and innovative efforts to reach out to attract foreign investors, make information more freely available and educate investors.
The past two years have seen a number of significant achievements: in 2012 the highest net foreign inflow was Rs. 38, 660.7 million, 2013 recorded the highest capital raised through debt IPOs at Rs. 68, 262.3 million and this year from January to June indicated the highest capital raised through equity IPOs since 2011 at Rs. 2, 393.8 million, the release stated.
The CSE in association with the SEC began a concentrated effort to attract institutional and high net-worth investors from across the globe under the “Invest Sri Lanka” Investor Forums held in Mumbai, Dubai, Hong Kong, Singapore and London in 2013 and 2014, it was stated.
Since the beginning of these international forums, there has been a steady stream of new foreign entrants to the market and renewed interest from existing investors, which has increased foreign purchases and net foreign inflows, it was noted.
“By correlating the timing of our investor forums with the inflows that have been generated from the respective countries where these forums were held, we are able to directly see the constructive nature of these forums for the stock market in Sri Lanka. Our greatest success has certainly been from Singapore, we have observed a net foreign inflow of Rs. 7,617.4 million in the first six months of 2014, as opposed to a net foreign outflow of Rs.2,054.4 million in 2013. In Hong Kong we saw a net foreign outflow of Rs. 175 million in 2013 and a net foreign inflow of Rs. 1.7 million in 2014,” Mr. Wijesundere said.
“Even in the case of the United Arab Emirates, where UAE markets were picking up at the time of our conference; we were able to portray the Sri Lankan capital market as an attractive investment avenue, which had growth potential. We have seen an improvement from a net foreign outflow of Rs. 134.9 million in 2013 to a net foreign inflow of Rs. 29.9 million in the first six months of 2014. Since the event in Mumbai, we have seen a net foreign inflow from India improve from a net foreign outflow of Rs. 106.7 million in 2013 to a net foreign inflow of Rs. 30.8 million in 2013,” Mr. Wijesundere said.
This joint effort has also resulted in 31 new accounts being opened from the locations where the investor forums were held. Additionally purchases from the countries where investor forums were held have increased significantly, it was stated.