IFRS compliance will benefit foreign investments
Charumini DE SILVA
The Colombo Stock Exchange (CSE) has been performing tremendously
well during the postwar era and has shown market sustainability. The
market has practised high levels of disclosure, corporate governance and
high accounting standards. "With Sri Lanka moving towards compliance
with International Financial Reporting Standards (IFRS) by 2012 it will
benefit greatly," Heraymila Securities Limited Director and CEO, Ravi
Abeysuriya said. The forces of globalization prompt more countries to
open their doors to foreign investment and as businesses themselves
expand across borders, both public and private sectors are increasingly
recognizing the benefits of having a commonly understood financial
reporting framework supported by strong globally accepted standards,"
Abeysuriya said.
"In attracting foreign buyers to the market it is necessary for the
brokers to conduct continuous research. Some of the stocks in the market
are slightly overvalued therefore there is a cost in getting out of them
and a higher premium has to be paid too," he said.
There are high possibilities to notice a noteworthy foreign
participation in the market in the near future as our market is fairly
valued or slightly overvalued. Due to the reasons such as sound
corporates, increased Gross Domestic Production (GDP), improved earnings
from different sectors especially like leisure and construction,
affluence in disposal income has uplifted the outlook of our market in
an optimistic manner.
"Conducting various road shows and convincing the vision of growth
strategy is vital in attracting foreign investors to the market.
Compared to the regional countries we have one of the good regulatory
regimes. However, it is significant to look at ways of setting up our
market into the radar of other markets via International Board,"
Abeysuriya said. Having a diversified corporate, variety of choices in
the stocks, companies with high levels of liquidity and viable level is
trading are essential. Encouraging wider institutional investor
participation and trading of debt and equity are significant to develop
the market. He said investors are keen on investing in state entities
like Sri Lanka Catering, Sri Lanka Insurance Corporation and Bank of
Ceylon. If these companies are willing to list even in small quantities,
it will make a major impact in the market as well as in the levels of
corporate governance.
"There is a good opportunity for us to attract foreign buyers
especially from countries like UK, Middle East, Australia and China. The
recent visit to the London Stock Exchange (LSE) has helped to uplift the
image of our market and being a member of the Commonwealth there is high
potential to draw the attention of UK investors, " he said. |