|
|
 |
 |
| Sunday, 8 December 2002 |
 |
|
 |
Business |  |
| News Business Features Editorial
|
Investing in the capital market Proper communication and advice, correct selection of stocks, long-term perspectives as well as understanding the risks involved are essential aspects to be considered before investing in the capital market. If these aspects are considered, investors can get the best return from their investments, said Ravi Abeysuriya, Chief Executive Officer Fitch Ratings Lanka Ltd. He said that if a person wants to make an investment, he/she should have all the information relating to that company stock and also be in a position to get correct advice from a stockbroker on whether it is prudent to invest in that stock. Another important aspect to consider is investing in the correct selection of stocks. Abeysuriya said it is always advisable to invest in a diverse array of sectors, considering the long-term aspects of the company rather than making some quick money and exiting. The most critical factor is understanding the risks involved. He said that although the Colombo Stock Exchange (CSE) and Securities and Exchange Commission (SEC) request all information about the company to be included in the prospectus, investors do not read them. "If a person cannot read and understand a prospectus, it is advisable not to invest in an Initial Public Offering (IPO)," he added. IPO is the buzzword these days. "An investor should understand the risks involved before making an investment as it might or might not perform." Most retail investors now invest their money in banks which is the only solid option available. They get a low return, but the money is safe. By investing in the capital market, they can get better returns and contribute to the development of the economy, but there is a risk involved. Therefore, the investment should be well spread so that the losses for an investor are minimised if the market crashes. He said that in most instances, the average person cannot make money by investing in the capital market due to many unfair practices such as insider trading and front running. Regulators cannot handle this situation as powerful people are involved in these transactions. This results in the retail investor loosing confidence in the regulator. When rules are violated, the SEC cannot take action because it cannot prove the misdeed. This is another reason for retail investors loosing confidence in the market. "To correct this situation, professionalism, transparency and corporate governance are essential," he noted. "If a person wants to buy shares, invest in good stocks, and do not ever exit when the market is down. Investing a proportion is a prudent measure," advised Abeysuriya. Expressing his views on mergers and takeovers, he said: "It is good as it helps consolidation and brings value to the company. We are yet to experience real mergers and acquisitions. Hostile takeovers will not happen if the management is good". Even at present certain sectors are not listed in the CSE and building confidence is the only way to attract these sectors to the market as a good capital market is very critical for the development of the country. Mr Abeysuriya said that our country needs active investors and not active players to boost the market and develop the country. |
|
News | Business | Features
| Editorial | Security Produced by Lake House |
