Positive capital market developments encourage investment - Deutsche Bank Head

"The international community has taken notice of the positive capital market developments in Sri Lanka over the past few years.

It has created a more positive investment environment, and an increased level of sophistication in the market," said, Head of Regional Management Worldwide, Deutsche Bank AG Juergen Fitschen who was in Colombo last week.

Two notable changes have been the evolution of the local stock market and the performance of the Sri Lankan Rupee.

The prevailing "free float" regime has brought about a market-driven exchange rate, which by and large reflects macro-economic fundamentals. This has brought about new types of client inquiry - in particular currency hedging techniques in trade finance and foreign exchange related business.

With regard to the stock market, there's been a near 3-fold increase in market capitalisation during the last 2 years, with total capitalisation now at around 30% of the country's GDP.

The recent large IPOs of Sri Lanka Telecom (SLT), Lanka Indian Oil Company (LIOC) and Dialog GSM have brought diversity to the local market while daily market turnover has also increased.

"If this trend continues - and the proposed privatization of some state-owned institutions occurs, capital flows into the country will likely increase," he said.

"An area of sustained focus should be debt market. The issuing of a Sri Lankan sovereign bond would be very beneficial.

It will present an opportunity for Sri Lanka to showcase its strengths to the international community; will provide a future source of diverse funding; and will give local corporates a benchmark for which to access international funds," he said.

"We are interested in all business areas in which we have a capability, globally. In Sri Lanka, Bank's traditional strengths have been in trade finance and cash management, and with our continued investment in technology and intellectual solutions we believe these businesses will continue to be very important to local corporates and financial institutions."

"Overall we are very optimistic about the business potential of Sri Lanka."

Deutsche Bank Sri Lanka has developed a strong grassroots community program over the last few years. This strategy saw us well prepared to assist immediately with tsunami relief efforts.

"We are currently involved in 22 separate projects in Sri Lanka covering housing, education, livelihood and counselling. Deutsche Bank is one of the largest global corporate donors to tsunami affected countries with a Euro15 million contribution."