Capital market to capture South Asia

Hiran H. Senewiratne

THE Sri Lankan capital market will be regionally positioned for the South Asian region by 2015, which will be the engine of growth to facilitate economic development of the country, CSE sources said.

The Sri Lankan capital market will play a pivotal role in enabling state owned enterprises to raise funds, either through equity or debt for building socio-economic infrastructure to improve the standard of living in the country, especially outside Colombo, Securities and Exchange Commission’s Director External Relations and Market Development Malik Cader said.

In addition, public listed companies will also raise most of their capital through equity and private debt securities.

They will also be a significant employer of talents, paying competitive salaries to attract top professionals.

With the growth of the capital market it would create a liquid and vibrant market in the country.

According to the SEC, the Sri Lankan capital market will be the preferred provider for selected financial services to serve the growing needs of the South Asian region.

Those countries in the region are Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka.Further it will not compete but complement countries in the region where it will be a niche provider of selected financial services.

Further, it will also be positioned as a niche for foreign investors in selected sectors of the capital market, providing ease of entry and exit (cross border investment), sources said.

It is said that Sri Lankan capital market will be the preferred choice for Sri Lanka companies to raise funds. It will bear the hallmark of an efficient and effective capital market with liquidity and vibrancy, spurring secondary market activity.

Further, Sri Lanka capital market will be an alternative source of funding to local and foreign corporations and state owned entities. It will provide flexibility in terms of duration/tenure and cheaper cost of funding compared to the banking sector.

It will also offer investors a broad range of capital market products catering to various risk return profiles including derivatives and collective investment.

Having a liquid and vibrant market it will enhance trading infrastructure, greater participation of EPF and Employees Trust Fund into the capital market and also greater participation by domestic including the rural populous and foreign investors, Cader said.