Listed corporate bond market:

Unutilized capacity still

Sanjeevi JAYASURIYA

A remarkable progress could be seen in the equity market and the trading of Government securities.

Ravi Abeysuriya

“As the Colombo Stock Exchange continues to be a high performing market the investors could benefit from trading. We need to encourage more people to the capital market”, Heraymila Securities Limited Chief Executive Officer Ravi Abeysuriya told Daily News Business.

The Government securities which involves the primary dealers in trading is default risk free. The equity market and the Government security markets are two sectors in the capital market that are well developed. However, the corporate debt sector is not developed compared to equity and securities markets. The Government removed some impediments in the sector through the recent budget to encourage more trading. Due to this reason a market growth could be expected over time, he said.

There is a great opportunity to develop the listed corporate bond market as the equity market is more volatile. This market yields higher returns.

There are developed regional corporate debt markets such as in Malaysia where Sri Lanka could take a cue to reach that level. The country’s equity market needs maturity and professionalism to enable investors to make informed decisions.

They need to have professional advice based on company performance for the potential investment. The stock market is driven by speculative trade and this is not the way for a market to operate. It should be on fundamentals and earning based information.

The unit trust industry which is a major component in the country’s investment portfolio needs to be further developed and promoted among the potential investors. There is tremendous scope as it is a Rs 20 billion industry at present, he said.

“There are 60 to 70 IPOs coming during the year and this will enable more investor avenues in the market providing opportunities for both local and foreign investors,” Abeysuriya said.