CSE gains stability from Price Band

by Lalin FERNANDOPULLE

The Colombo Stock Exchange (CSE) has gained stability through the Price Band imposed last year and the market is poised to attract large investors said a top official of the Securities and Exchange Commission (SEC).

The CSE made a huge turnover last year despite speculation that the market would crash due to manipulation.

“The stock market performed extremely well last year despite adverse criticism on the Price Band. The CSE is confident that more investors will enter the capital market and make sound returns this year”, SEC Chairperson, Indrani Sugathadasa said.

Although the CSE is performing well analysts are concerned about the exit of foreign investors after making profits and that the money would be going out of the country. Director General SEC, Malik Cader said that foreign investors were exiting the stock market after making profits and added that the money is not going out of the country but rather it is invested in other business ventures.

Analysts are of the view that there could be some mechanism to retain these investors as net stock buyers. Foreign investors are exiting from the CSE as net stock sellers.

SEC is in the process of formulating a plan to attract foreign investors which would boost capital market growth and build confidence in a viable market.

SEC has planned to educate rural investors on the huge potential of the stock market and the benefits in investing in high yielding markets. The CSE will hold a series of workshops in Kandy. The first program on ‘Introducing the CSE’ will be held on March 8 from 3.00-4.30 pm.

“The Sinhala media has a great role to play in taking the message to the rural community through informative and educative articles to generate interest and lure in more people to join the capital market”, the Chairperson said.

The general perception is that the awareness of the stock market and investors are confined primarily to the Western province and that very few investors from the provinces invest in the capital market.

The CSE has set up branches in Gale, Kandy, Negombo, Matale and Jaffna. CSE hopes to set up more branches to infuse capital market growth.

“CSE has expanded its services to cater to the needs of investors so that not only large scale investors but also small investors could invest in the CSE,” Sugathadasa said.

Cader said around 50 companies are expected to enter the CSE this year and added that nearly 10 IPOs will be launched within the next two months. He said at least two or three of these issues will be over Rs. 5 billion and added that a number of state firms are expected to be listed in the stock market.

SEC lifted the 50 percent upfront deposit for Price Band stocks and also reduced the Price Band duration of share trading from 15 to 10 days from March 1.