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| Sunday, 23 March 2003 |
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| News Business Features Editorial
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New opportunities at Colombo bourse The positive sentiments of the peace process were reflected in the Colombo stock market with the All Share Price Index gaining 31.2 per cent and the Milanka Price Index gaining 33 per cent in 2002. Estimated GDP growth for the year is at 3.2 per cent from a negative 1.4 per cent in 2001 with inflation reduced to 9.6 per cent from 14.2 per cent in 2001 - indicators of a market revived by renewed investor confidence and interest. The largest Initial Public Offering in the country, of Sri Lanka Telecom Ltd (SLT), was listed this January along with Lanka Hospitals Corporation Ltd (Apollo), adding Rs. 23.7 billion to the bourse. The two listings helped boost market capitalisation of the Colombo Stock Exchange (CSE) by 26 per cent with SLT accounting for 14 per cent of the total market capitalisation as of end-January 2003. The CSE hopes that this boost in liquidity and market capitalisation will reflect favourably on its chances of getting re-included in the MSCI Index, a benchmark index for fund managers globally. A re-inclusion would mean that a strong possibility exists for international fund managers to enter the Colombo stock market. Along with the prevailing peace process and stabilised political situation conducive for investments, the current economic conditions are ripe for the stock market. Interest rates, as measured by the 12-month Treasury Bill rate, dropped to 10 per cent at year-end from a 13.8 per cent level at the beginning of the year. Lower interest rates have led to a decreasing rate of return on investments in the form of money put away in banks - prompting more people to look into the benefits of investing in stocks as an alternative option. To spread knowledge and awareness about the Stock Exchange, its functions and general information about trading, the CSE has launched a marketing pitch aimed at reaching both local and foreign investors. The CSE has also revamped its web site to provide more value-added services to investors and potential investors. It will include a live market feedback from this month. The increase in corporate profits registered by companies listed on the bourse, facilitated by part from the reduction in interest rates, reinforces the strong position of the stock market in the current context. Strong corporate profits lure investors to the market and attract new investments, which in turn strengthen the market capitalisation and liquidity of the bourse. During the first three quarters of the year under review, quarterly profits increased by 127 per cent in comparison to the same period in 2001. |
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| Editorial | Security Produced by Lake House |
