CSE targets 4 % increase in retail investors

H.D.H Senewiratne

The Colombo Stock Exchange (CSE) is now in the process of increasing the number of retail investor participation by four percent in the market with more aggressive promotional campaigns locally as well as overseas, CSE -Head of Marketing Niroshan Wijesundera told Daily News Business.

"At present only one percent of the population is involved in the market, which they intend to increase by four percent before the end of next year with aggressive promotions locally as well as overseas," he said.

He said that more than 696,000 central depository systems including multiple accounts have been set up with the CSE. With all promotional activities locally as well as overseas the CSE will be able to increase retail and institutional participation considerably before the end of 2013.

Wijesundera said in the long term perspective the country has a huge growth potential, therefore it is the need of the hour to increase the size of the market in many fold to attract local as well foreign investor participation in the CSE.

"Major sectors such as agriculture apparel and certain plantation sector companies are not listed in the CSE. With these developments, the CSE is taking keen and aggressive steps to increase the awareness level," he said.

Wijesundera also said they have also held several overseas road shows in India, Malaysia and Singapore during the last few years and plans are afoot to organize more road shows in other countries next year to promote foreign investors to the market.

According to Wijesundera, local companies contribute 42 percent of the turnover of the market while foreign companies and retail investors' contribution was 22 percent. Therefore, with foreign road shows and local awareness programmes the CSE could enhance the global competitiveness, he said.

At present, aggressive local awareness programmes were held successfully in Nittambuwa, Hambantota, Badulla, Negambo, Maharagama, Wattala and Kadawatha areas to attract local retail investors into the market, he said.

Influenced by increasing competition many exchanges have opted to demutualize the governance structure and make the Exchanges commercially focused business organizations. Some of the other reasons that have influenced the change in governance structure were the need to make a distinction between ownership rights and trading rights and enable management to make strategic decisions looking at the perspectives of the Exchange rather than being limited by the interest of members.

Demutualization of CSE will make it more dynamic and efficient and will increase the confidence of foreign investors as well as local investors in the Sri Lankan capital market.

The small size of our capital market has always been an issue when attracting major individual and corporate investors and foreign funds.

This question has to be addressed if we are to develop our market to be comparable with some of the emerging markets in the region, a CSE source said.