More companies likely to enter CSE
Charumini de Silva
There is possibility for 10 to 15 companies to get listed in the
Colombo Stock Exchange (CSE) within the next year, an industry expert
said.
"Sri Lanka's capital market has been performing well during the post
war situation. Therefore, another fifty companies could enter into the
capital market in the years to come," he said.
More companies entering into the capital market will provide them a
better opportunity to raise capital in a cost effective manner. It also
helps the company to have credibility, a valuation and tax benefits.
However, the participation of Small and Medium Entrepreneurs (SME) in
the stock exchange is comparatively low.
The Securities and Exchange Commission (SEC) is encouraging more SMEs
to get listed in the CSE as there is much scope for this segment to
expand their business. When companies are listed in the CSE, it will
help to attract more foreign and local investors to capital market
activities.
Although market capitalization of the CSE has increased over 10 fold
since 2002, our market remains very small in relation to regional
markets. One of the reasons for this is that the number of listed
companies during this period remaining static, Securities and Exchange
Commission Capital Market Development and Research Director Vajira
Wijegunawardane told Daily News Business.
However, during the post war scenario we have seen encouraging signs
of six companies raising finance by way of IPO's with more being in the
pipeline.
"It is important to focus on encouraging large companies to get
listed in the CSE as they would raise capital, while making a big impact
on increasing the market capitalization of the CSE and add liquidity in
the market," he said.
The Director said State owned enterprises too should be encouraged to
tap the capital market for fund raising.
For example the Bank of Ceylon raised finance with their listed
debenture issues.
Another option which needs to be pursued has been done very
successfully is to find fund infrastructure projects through the capital
market. This method is being practised in other countries in the
region,especially in India to raise part of their infrastructure
development funds. |