Promoting the stock market internationally vital - Former SEC DG
By Lalin FERNANDOPULLE
The need of the hour is to increase the demand of the stock market,
said former Director General of SEC Channa de Silva. He told the Sunday
Observer that many factors were involved to drive the demand side of the
equation .
Among these factors are fundamental earnings growth of listed
corporates and attractive valuations of the pricing of shares, investor
confidence in the market for local as well as foreign investors, proper
governance structures and effectiveness of regulations, access to
information for foreign and local investors. Meanwhile, local investors
said this was a rewarding investment decision as compared to bank
deposits and other alternative investments.
Among the important aspects that we need to promote the local stock
market overseas is to engage in foreign roadshows aimed at international
investors, he said.
We need foreign road shows in Hong Kong, Singapore, China, Indonesia
and should also look at the US, UK, Russia and India as other
destinations to showcase the Sri Lankan equity market, specially during
this post-terrorism era.
There was a crisis in the Securities and Exchange Commission
recently. Former chairman of the SEC,Tilak Karunaratna resigned from the
post barely a year after his predecessor Indrani Sugathadasa stepped
down in December last year.
Chairman of Venture Capital Lanka, Channa de Silva said that the
country should popularise the stock market domestically with rural
investors, specially using the mutual fund industry.
He said high bank interest is putting significant pressure on local
companies and also defusing their interest to grow fast as borrowing for
these companies become non viable. Since depositors get high interest
rates they find the stock market unattractive.
All measures should be taken to reduce the interest rates using all
mechanisms available to the Central Bank of Sri Lanka. If interest rates
do not drop fast it will have a high impact on the markets as well as on
the economic growth expectations of the country. It is important that
all efforts are made to reduce interest rates, de Silva said. A
concerted effort to popularise the stock market within the country as
well as internationally with international fund managers is a must, he
said. He also said that more companies should get listed as during past
year there were virtually no IPOs in the market. Companies should be
encouraged to list in the Colombo Stock Market to increase the supply
side of the market.
Regulations introduced during the past two years should be reviewed
carefully to see whether such regulations will impede listing and make
listing non viable for entrepreneurs .
Reviving the stock market requires a fresh attempt from all angles to
increase demand and the supply of the market, de Silva said..
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