Stockbrokers help improve transactions:

More investors familiar with CSE

Harshini PERERA

Several investors are now familiar with the Colombo Stock Exchange (CSE) and they have become interactive investors owing to the branches, Stockbrokers too have helped to increase the number of transactions, said CSE Manager, Business Development, Tushara Jayaratne.

Tushara Jayaratne.

Q: There is a great improvement in the Colombo Stock Exchange recently. In spite of the record-breaking performance at the CSE, only 18 percent of the rural community contributed towards the performance. What are the strategies you hope to adopt to attract those in the rural areas to the market?

A: In the early 1990's the total market turnover - 70 percent came from foreign investors whereas the domestic participation was only 30 percent. The Colombo Stock Exchange was in Colombo and there, were no branches. During that period the South Asian and East Asian crisis had a large impact on the transactions of the CSE. Hence, foreign investments at that time were low and transactions were dull.

To encourage the rural community for daily transactions, the CSE set up its first branch in Matara in 1999. The second branch was opened in Kandy in 2003. The third and fourth branches has were set up in Kurunegala and Negombo in 2005 and 2007. In addition a branch will be opened in Jaffna before the end of this year.

Not only the CSE but also stockbroker firms shifted to other parts of the country. Hence, it helped us to attract rural investors to the market and that resulted in a magnificent growth in the Colombo Stock Exchange. The daily average turnover from the rural community has improved dramatically and it was 18 percent at present.

Several investors are now familiar with the CSE and they have become interactive investors owing to the branches. Stockbrokers too have helped increase the number of transactions. There have been continuous education programs for the public on the Stock Market. It had been the main strategy to attract many people to the stock market and learn the advantages as investors.

The CSE has taken steps to hold regular seminars on the stock market and these could generate a turnover of Rs. 30 billion from new investors. Access to the Stock market was widened with the educational programs conducted on a daily basis in every part of the country and it had helped improve one's knowledge on the stock market. Internet trading has also helped.

Q: What are the facilities given to investors in rural areas?

A: We have received a large number of inquiries from the rural areas as well as from Colombo. Hence, the CSE has introduced a hotline for these inquiries. There is a special system at the branches for those who wish to get proper and accurate information on the stock market, so that investors would not be deceived. The number of participants at seminars has increased showing that people are keen on investing in the stock market.

Q: What progress would you make with the setting up of the new branch in Jaffna?

A: We conducted seminars in Jaffna during the ceasefire period from 2002-2006. We have taken steps to educate the people in Jaffna even before the branch was set up. There was a response especially from undergraduates and young people.

This will support the daily turnover of CSE transactions. We hope to set up the branch before the end of this month and awareness programs will be held before the branch is set up. We will conduct regular seminars at this branch similar to those in other branches.

The awareness programs generally begin with a beginners' workshop for one month. The programs are designed to deliver a complete understanding on every aspect of investing in the CSE. The CSE held an Investor Day visiting a town on a single day while conducting seminars. The Investor Day was launched three years ago and fifteen have been already held in Sri Lanka.

Regular seminars will be held on different topics on the stock market. One-hundred-and-fifty seminars were held for investors this year and among them more than 100 seminars were for students. We conduct seminars for Undergraduate students, lecturers, teachers and company employees.

The Colombo Stock Exchange at the World Trade Centre. Picture by Sumanachandra Ariyawansa.

Q: Can you give a profile of the investors in the branches and their professions ?

A: Most of the investors in the branches were pensioners, business personnel and young employees in the Government and Corporate sectors and students. Hence, it comprises a cross-section of people.

Q: Do you think that the ratio of foreign and local investors should be 50-50 percent?

A: It is better if you can continue the ratio as 50-50 percent on both because overdependence on any particular party will not be good.

Q: The Colombo Stock Exchange became the best performing stock market on Monday and Tuesday. What was the response from foreign investors?

A: The net foreign inflow was Rs. 1.1 billion until this month and foreigners were the net buyers during the past few days. The CSE was one of the top five stock markets in the world after the war.

Q: The participation of women in the stock market is high in countries such as Singapore. How will the CSE increase women participation?

A: There is less participation among women in the stock market possibly due to the culture in Sri Lanka. Practical steps should be taken to attract more women to the stock market. It can be done mainly through education, the media and seminars especially for females.

The CSE is working closely with Housewives' Associations in the country for the purpose. There are educational programs through various publications.

Female participation in the stock market was 17 percent last year but it should increase further.