| Business |
||||||
|
New
kids on the bourse For years names
like Harry Jayawardene and the Captain family have been a major
presence on the share registers of some of the country's biggest
listed companies. But recently
there have been signs that a new generation is making its mark. Depending on
who you believe, UK-based Sri Lankan expat Dr. Sena Yaddehige now
owns somewhere between 30 percent and 50 percent of Richard Pieris
and Company (RPC). In March, Ariyaseela
Wickramanayake snapped up the government's 53 percent controlling
stake in Pelwatte Sugar Industries through his shipping company,
Master Divers. But the young
entrepreneur making the most waves has been Dhammika Perera, who
now owns about 10 percent of NDB Bank and just under 30 percent
of Royal Ceramics. Perera, who
owns the Bally's casino chain in Colombo, has captured the market's
attention for his business acumen (and not because he is the third
member of an unlikely trio of Dhammika Pereras: the businessman;
the notorious underworld figure; and the Securities Exchange Commission's
director of monitoring and investigation). In a deft piece
of timing, Perera bought much of his NDB stake last September when
the stock was trading at about Rs. 30. Sharp rise NDB shares
are now trading at closer to Rs. 90 - a threefold increase. And Perera
is far from finished - another major deal is expected this week. These new players
are also far from passive investors. Perera and
Yaddehige, for example, have taken seats on the boards of NDB and
RPC respectively. So does all
this mean that the old guard's hold on the market is under threat? Market insiders
reply with a resounding "no". "The major
players in the market are the same, it's just that they've got bigger,"
said one leading analyst. Whereas in
the past the old guard concentrated its holdings on a few major
companies, now they are spreading their investments across a much
wider range of stocks. The Captain
family still has major shareholdings in a number of blue chips,
including RPC, John Keells Holdings, Asia Capital and HNB. But that is
not to say that the new entrants have not caused ripples. Some market
observers say that a fresh face on a share register can be perceived
the wrong way by management, who might have developed a cosy relationship
with the company's long-time shareholders. "One could
say they [management] have been threatened, especially if they are
not prepared," said one broker. In some cases
it is obvious how far the large investors have spread through the
market; in others, less so. Market insiders
say the Captain family's holdings are relatively transparent. Harry J The best known
example is Jayawardene's interest in Sampath Bank. Through Hatton
National Bank, of which he is a director, and the Stassen Group,
which he owns, Jayawardene is said to hold as much as 45 percent
of Sampath. Apart from
the entrance of some young and wealthy investors, another important
change has been taking place in the share market. The number
of smaller investors appears to be slowly increasing - a critical
step for a maturing market and one which fulfils a key aim of the
Colombo Stock Exchange (CSE) and the government. "A broad-based
shareholding would be one of the main objectives for everyone to
pursue," said Naren Godamunne, vice president at DFCC Stockbrokers. In 1997, the
Hayleys Group had 1,976 shareholders on its register. By March 31
this year that number had grown to 2,906 - an impressive 47 percent
increase but still a tiny number of shareholders for one of the
country's biggest listed companies. This growth
is clearly dependent on the strength of the share market. The CSE's head
of marketing, Rajiva Bandaranaike, said that in the eight months
from January to September last year - a period when the market was
stuck in a rut - just 2,835 new accounts were opened. But when share
prices surged in September and October, 2,232 accounts were opened
over just two months. "The market
sentiment and the increase in valuations - I think that has drawn
new people in," Bandaranaike said. At May 31,
there were 254,131 local shareholders registered with the CSE. Trusts A further way
to increase the role of smaller players in the share market is through
managed trusts. These vehicles
put difficult investment decisions in the hands of professionals
and enable unit holders to reduce risk by diversifying their share
portfolios. Although trusts
do appear to have increased their share of the market, market insiders
say they have not lived up to their potential. "They
have been a bit of a disappointment," said one broker. "The market
has been bad but they should have been able to read the market." Despite the
inroads smaller investors have made into the share market, there
are still concerns that the system is biased against their interests. An important
hurdle for these new players is lack of information. According to
Dr. N.I. Wickramanayake, a long-time advocate for small shareholders,
the local share market is much too rumour-driven, putting at a disadvantage
small investors who are not privy to the information leaks. "Too many
small shareholders know nothing about fundamentals and too many
brokers who are called financial advisors really know nothing about
fundamentals," he said. "Brokers
are really just promoting trades, so they can't give any proper
advice to investors." |
||||||
Copyright © 2001 Wijeya Newspapers
Ltd. All rights reserved. |
