CSE to reposition Sri Lanka as an emerging market in Asia

Investors in rural areas targeted:

Charumini DE SILVA

This year will be very challenging as the Colombo Stock Exchange (CSE) will strive to structure and reposition the country as an emerging market in Asia, Securities and Exchange Commission (SEC) Director General, Channa de Silva told Daily News Business.

He said that there was a possibility of introducing new areas such as dual listing and listing of foreign companies in the CSE. It is important to have a more inclusive set of investors to join the CSE, especially from rural areas, outside Colombo and those who have not invested in the CSE. Therefore, the CSE could be considered as an alternative investment vehicle.

The participation of those in rural areas in stock market activities is very low and one of the objectives of the CSE this year is to increase their participation and to support local entrepreneurs to get listed while introducing a novel investment instrument in the CSE, de Silva said.

It is vital to increase the demand and the supply chain of the CSE. From the institutional standpoint it is essential to have pension funds, Employees Trust Funds, Employees Provident Funds, retirement savings and insurance companies investing in the CSE to increase the demand.

More local entrepreneurs, new companies and new investment instruments, exchange traded funds, real estate investments and derivatives should enter the market to increase the supply chain this year, he said.

The Director General said that the CSE is an alternative way to invest. More SMEs, insurance companies and financial companies entering the market is timely since it will create opportunities to raise funds.

This will also create much interest in the stock market with the new market players. The CSE hopes that these activities will encourage people to invest in the CSE, as it is the lead indicator of the economy.

The movement of the stock market will be thoroughly scrutinized by the fund managers and investors especially when they make new allocations this year. The CSE will gain significantly as it is destined to do so this year.

Sri Lanka’s stock market activities are still in the early stage of development and it is vital to change the savings’ mindset of people as the stock market offers higher returns on their investments, he said.

He said that corporate governance is necessary when moving into different levels of business to create a degree within the companies and be more accountable for their shareholders and to increase the transparency of the company. Therefore, corporate governance is compulsory for all listed companies in the CSE.

The SEC has plans to conduct a few road shows in East Asia and in Western countries to attract more foreign investors to the market. The target of these road shows is to attract foreign funds and the Sri Lankan diaspora into the country’s capital market. The CSE, being in the forefront of the economy is optimistic about the year ahead and is confident that this momentum will continue, de Silva said.