Govt aims to double share market cap by 2012
Sri Lanka plans to double the Colombo Stock Exchange's CSE market
capitalisation from the present $19.8 billion over the next two years by
listing companies partly owned by the state, the central bank governor
said on Friday.
Speaking at a Reuters forum in the capital Governor Ajith Nivard
Cabraal said that will ensure there is enough liquidity for foreign
investors to take part in the Indian Ocean island nation's post-war
economic revival via equities.
Many institutional investors trying to catch a piece of the growth in
Sri Lanka's $42 billion economy since the end of a civil war in May 2009
have shield away from the share market, because of its small size and
lack of free float.
"We are targeting a few billion rupees through listing companies
which have a government stake," Cabraal said. "Some big companies
partially owned by the government may be listed."
He also said that one or two privately-held conglomerates and other
large family businesses are headed towards listing.
"This will probably double the capitalisation," Cabraal said.
Sri Lanka's share market capitalisation is at 2.2 trillion Sri Lanka
rupees ($19.8 billion), having doubled in the first 10 months of 2010,
with local investors and state-owned funds surging into shares.
Foreign investors have sold a net 27.3 billion rupees in shares this
year, with most offshore interest having been focused on government
treasury securities which still offer an attractive yield in the wake of
the global financial crisis.
But the limit on foreign holding has been reached, leaving investors
searching for other ways to get exposure.
Sri Lanka is also aiming to double its per-capita gross domestic
product to $4,000 by 2016, and that means the banking sector's lending
capacity has to be more than doubled to achieve that, Cabraal said.
"Banks' lending should be more than double to around 4 trillion
rupees from the current 1,800 billion rupees in the next five years to
double GDP per capita," he said.
Though the government is not considering relaxing a 100 percent tax
on foreign property ownership, it has planned to release prime property
in the capital Colombo for large outside investors, and to raise money
through long-term leases.
Colombo has some of Asia's most valuable and underdeveloped seafront
land, owing to a quarter-century civil war that made tourism investment
a risky prospect.
"We've agreed to release valuable land where army and defence
establishments are located and release them on long-term lease," Defence
Secretary Gotabaya Rajapaksa, who is also overseeing post-war urban
development, told the forum.
Part of the process involves moving about 75,000 families from slums
and shanties in Colombo which are located on valuable state property or
road and railway reserves. The plan is to build homes outside the
capital for relocation, he said.
"We have to find a way to finance this because it is expensive for
relocation, but it is feasible. International, local companies
partnering with govt to build 30,000 homes over next three years for
slum dwellers' relocation," he said.
(Thomson Reuters)
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