CSE needs derivatives to enhance growth - Deva Ellepola

Hiran H. Senewiratne

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Profile

Name- Deva Ellepola

Schools attended - St Thomas College, Matale, Trinity College, Kandy

Civil Status - Married with two daughters

Education - Diploma in Marketing Management NIBM

Current positions Managing Director HNB Stockbrokers Ltd

Executive Director, Acuity Stockbrokers (Pvt) Ltd

Former Chairman, Colombo Stockbrokers Association

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The Colombo Stock Exchange (CSE) needs new products like derivatives to enhance growth in the market, like in India, said Managing Director HNB Stockbrokers (Pvt) Ltd, Deva Ellepola.

He said that we need various products to grow the capital market of the country. Currently we only deal with stocks in the market. Therefore, with the introduction of new products like stock futures and index futures we could create a vibrant market from the medium to the long-term perspective.

Ellepola said we have two ways to enhance growth in the market. One is to increase the number of companies and the other is to increase the number of products to the market. Therefore, increasing the number of companies in the stock market is difficult and the only alternative is to increase new products/derivatives to the market.

Q: As an experienced person in the trade how do you see the performance of the Colombo Stock Market?

A: In the past five years the stock market recorded a 30 per cent growth in the All Share Price Index. We have not faced any crisis before and we were quite resilient even when the Asian crisis erupted. Now we are experiencing a dual effect due to the US recession, which is affecting the export sector especially the tea and apparel sectors and the economic crisis in the Middle East. Therefore, we might get affected in all corners in the future. However, the last three to six months till the end of December the market lost 40 per cent, while in the last few weeks the market was able to regain 15 per cent. The most important thing is to have a medium to long term sustainability of the stock market.

Q: What is the new joint venture between your company and the DFCC?

A: The new joint venture entity is a 50-50 per cent partnership between HNB and DFCC. This is a Rs 500 million capital company deal with stock brokering, debt securities and corporate financing. Both companies have strengths. HNB has primary dealer licences, which are a fixed income company, and the DFCC is a stock brokering and corporate finance company. Therefore, we want to synergise the strengths of both companies. Further, the clients of both banks and two stock brokering companies are our strength and we can leverage into clients to the joint venture. The name of the joint venture would be Acuity Stockbrokers (Pvt) Ltd and I will be the Managing Director of the company.

Q: How would bank interest rates, inflation and currency fluctuation impact the local economy?

A: This has a three-pronged effect on the country. However, we have to forget certain things as the government is successfully combating terrorism. In that journey certain macro issues have been affected. Once the terrorists are defeated we have to direct the country for economic development especially in financial and fiscal disciplines. There are multi-faceted problems and we cannot single out the war alone. When it comes to international issues the country has to reposition itself to drive the economy forward.

Q: Do you think the stock market is the barometer for the country's economic development?

A: What the stock market reflects in value terms may be insignificant where the capital and stock market is concerned in Sri Lanka. However, it is the mirror of the economy. What is happening in the stock market is that certain sectors such as the banking and plantation sectors are reflected well.

Q: What is your advice to decision-makers in this country to resolve the current problems?

A: At this juncture the terrorist problem is the main concern of the government. I appreciate the way the government is handling this issue. Once peace and harmony is restored in the country the most important thing is to direct all energies to develop the country to accelerate growth and create jobs. The most important thing is for the government to bring down bank interest rates.

Q: Do you feel Sri Lanka should position itself as an industrial country?

A: Sri Lanka should have a mixed system with a strong agro base. We also need to have a quality industrial and service sector because our standard of English and the high literacy rate will pave the way to reap benefits.

Therefore, all three sectors need to have a winning combination of the economy.

Q: What is your philosophy in life?

A: I started as a Research Assistant at Bartleet Commodity Exchange.

We deal with New York gold futures and Tokyo gold futures.

Therefore, I believe that everybody should come up the hard way in life.

If you go through the mill you can climb the corporate ladder especially in one's professional career.

I am also a Buddhist but respects all religions, which teach good things in life and to do good things in life.

Q: What is your retirement plan?

A: I have not thought about it, but I want to move away from the hustle and bustle in Colombo, because I like tranquility and the nature of the countryside and will also impart my knowledge, which I gained through my working experience.