CSE needs to broadbase for vibrant market -Chairman

The Colombo Stock Exchange (CSE) needs to be broadbased to increase the liquidity in the market by introducing new instruments to create a vibrant market, Chairman Nihal Fonseka said.

"The stock market is very good when it is performing well but will not be able to make profits when the market is not performing well due to the absence of high yielding instruments in the market," he said.

However in other developed stock markets, especially in Malaysia and Hong Kong and Singapore investors can make profits even when the market is performing awfully due to the availability of different types of strong instruments in those markets, he said.

The stock market needs more new instruments like bringing in short selling in security and stock borrowings as a shot term strategy while creating awareness in every level on the market, he said. Fonseka said, in the last two years, many listed companies raised equity by way of trading huge amounts of existing shares to the public despite not being listed in the CSE during the last two years.

He also said only 1000 active stock market investors account for 80 per cent of the turnover.

They are now in the process of introducing various short to medium term strategies to broad base the CSE by introducing new instruments in the market.

They are now in the process of evaluating the All Share Price Index and Milanka Price Index are actually following the capital in the company.

Fonseka said the CSE is focusing on strategic investments by issuing a certain quantum of shares to the public like Dialog Telekom and Sri Lanka Telecom to the market. However the weight of those stocks on the index is very high, therefore we have to encourage more stocks to be released to the public while encouraging new companies to be listed in the CSE", he said.

The CSE Chairman also said that to broadbase the market they are looking at regulatory requirements to ease listing procedures in the CSE to encourage new companies to be listed in the CSE.