For greater market sustainability:

Capital market embarks on strong strategies

Charumini de Silva

Nihal Fonseka

Sri Lankan capital market is embarking on strong strategies which will result in grater market sustainability in the country.

Speaking at a recently held forum Colombo Stock Exchange (CSE) Chairman, Nihal Fonseka said the country’s capital market is embarking on good strategies. The introduction of derivatives will create greater market liquidity and debt, while the Central Counter Party (CCP) will provide protection for market participants in the event that a buyer or seller defaults.

Sizeable fresh capital-raising by banks and non-bank companies over the next one to two years will allow foreigners to tap into the primary market.

This will ultimately improve trading volumes and wideness on the local market. The growth in the stock market and the end of the war has also helped in capital-raising initiatives.

CSE average daily turnover has increased to US$ 16 million during the first half of 2010 compared with US $ four million in the previous year, spiking up to US $ 26 million in June 2010.

The foreign participation in trading has risen from US $ 2.5 million per day to US $ eight million, striking US $ 12 million in June. Year-to-date, foreigners have been net sellers of Sri Lankan shares.