SEC presents road map for capital market development

Vishmi WIJERATNE

Securities and Exchange Commission of Sri Lanka (SEC) together with the Colombo Stock Exchange presented a three year road map that will guarantee the success of the capital market in the coming years.

Acting Director General of SEC, Hareendra Disabandara, said that rapid growth had been recorded since 2009 after the war.

“The market returns recorded for the last 24 years before 2009 has been 12.58 % however in the last three years we saw a growth rate of 32.8 %, the average return of the stock market since 2009 is 53.1 % where treasury bills have given a return of 12.5 % thus significantly proving the growth capacity in the country when in peace,” he said.

He also said that the All Share Price Index (ASPI) too had shown development in the past three years.

The ASPI recorded 14, 000 points in the past 24 years before 2009 however since 2009 up to date it had developed around 4,000 points in a minimum of three years. “There had been a development of 63 % since December 2009 to October 2012 thus there had been a significant development,” Disabandara said.

Meanwhile, Chairman, SEC, Dr. Nalaka Godahewa said that though such developments has been seen even in foreign exchange, he said that it is a mournful fact that there are less than 50,000 active Credit Default Swap (CDS) which means around 1 % of the population of the country actively engages in the stock market during the last 28 years. “The average market return per year since 1985 is 26.55 where as treasury bills have given an annual average return of 14.4 % from 2000 the stock market has given an annual average return of 32.8 % as against a 12.0 % return on treasury bills,” he said.

However, Dr. Godahewa said that the debt market and other products are not at all developed as more than 75 % of the Sri Lankan capital market depends on equity. “The CSE is not yet demutualised following the global and regional examples. Unit trusts being a good mechanism in getting the ordinary public involved in the capital market has not caught up and our concern for the future is getting the common public to contribute more to the capital market,” he said.