CSE on positive growth trajectory - CSE official

As Sri Lanka's economy takes an upward turn, with economic growth at 7.5 percent over the past four years, macroeconomic indicators signal an ideal environment for investment, with bank interest rates at an all-time low, the investment atmosphere is idyllic for prudent and well informed investors.

"It is important to understand the long-term nature of capital market investment and the cyclical flow that it follows. If one looks at the indices today, one sees the positive growth trajectory of the market," CSE's Head of Market Development, Niroshan Wijesundere said.

"The ASPI has crossed the 6,600 point mark and the S and P SL20 was recently at the highest since its launch, indicating that the stock market is now on an upward trend based on valuations and fundamentals," he said.

The Colombo Stock Exchange (CSE) with the Securities and Exchange Commission (SEC) and other stakeholders, have developed the capital market, with a new strategic direction since 2012.

Under the CSE's three-year strategic plan and the SEC's ten-point plan, the CSE has embarked on a steady phase of growth and these efforts are now coming into fruition.

The CSE and SEC have taken bold and innovative decisions to attract foreign investors, make information more freely available and educate investors.

The past two years has seen a number of significant achievements: the highest net foreign inflow of Rs. 38.660.7 million in 2012, the highest capital raised through Debt IPOs - Rs. 68,262.3 million and the highest capital raised through equity IPOs since 2011 - Rs. 2,393.8 million was recorded from January to June this year.

The CSE with the SEC began a concerted effort to attract institutional and high net-worth investors across the globe by projecting the CSE as an attractive emerging market.

Investor fora under the banner 'Invest Sri Lanka' were held in Mumbai, Dubai, Hong Kong, Singapore and London over the course of 2013 and 2014.

Presentations were made by high-level government and financial sector representatives, who made a strong case for investing in the Sri Lankan capital market.

Since the launch of these international fora, there has been a steady stream of new foreign entrants to the market and renewed interest from investors which has increased foreign purchases and net foreign inflow.

"By correlating the timing of our investor fora with the inflows that have been generated from the countries where these fora were held, we directly see the constructive nature of these fora for the stock market in Sri Lanka," Wijesundere said.

"Our success has certainly been from Singapore. We observed a net foreign inflow of Rs. 7,617.4 million in the first six months of 2014, as opposed to a net foreign outflow of Rs. 2,054.4 million in 2013. In Hong Kong we saw a net foreign outflow of Rs. 175 million in 2013 and a net foreign inflow of Rs. 1.7 million in 2014," he said.

"Even in the case of the United Arab Emirates, where UAE markets were picking up at the time of our conference, we portrayed the Sri Lankan capital market as an attractive investment avenue, which had growth potential," Wijesundere said.

"We have seen an improvement from a net foreign outflow of Rs. 134.9 million in 2013 to a net foreign inflow of Rs. 29.9 million in the first six months of 2014. Since the event in Mumbai, we have seen a net foreign flow from India improve from a net foreign outflow of Rs. 106.7 million in 2013 to a net foreign inflow of Rs. 30.8 million in 2013," he said.

The joint effort between the CSE and the SEC has also resulted in a number of new entrants to the market with 31 new accounts being opened from the countries where the investor fora were held.

Additionally, purchases from countries where investor fora were held has increased significantly.

"These fora are a joint effort which brings together a number of stakeholders in the capital market, from brokers, to custodian banks and the market regulator, their input has been vital to the success of the conferences and the positive outcome which they have yielded," Wijesundere said.

Several months ago, the CSE launched a mobile application which provides vital market information to users across the island and overseas, in all three languages.

The application allows users to access, a market summary, ASPI and S and P SL20 graph details, latest trades, announcements, price list, gainers and losers, details of listed securities and a 'My Portfolio' feature which is a personal watch list.

First launched for Android mobile devices, the App is now also available for the iOS platform as well and can be downloaded free from Google Play and the Apple iTunes store. Since its launch in December 2013 the Android App has had 4,736 downloads, whereas the iOS app, launched last month has been downloaded 568 times.