CSE urges government entities to list

A top stock exchange authority is urging the government to list at least some state entities in a bid to increase the market capitalisation of the Colombo Stock Exchange (CSE).

“Many say that family firms need to list for the market capitalisation to increase, but if the government can list at least a small proportion of its companies such as the ports and the airport, CSE’s market capitalisation will increase by a long margin,” Nihal Fonseka, Chairman, CSE told The Sunday Times FT.

He said that since the government does not follow privatisation, they will have to come up with another model to facilitate listing their entities in the CSE. “Privatisation is out, so they will have to find a model to give effect to this through some other mechanism other than privatisation,” he said. He said that the government has got some models lined up in this regard, but reiterated that it will have to happen soon.

He stressed that while the increased turnover and the growth of the indices witnessed in 2006 are very encouraging, the fact remains that when compared with other regional exchanges, the penetration and turnover of the CSE is very low in the context of relevant national economic indicators and the investment made in the advanced technology platform on which the CSE operates.

Fonseka said in the last few years, the CSE had not been able to convince many new issuers of equity or debt, the advantages of listing in an environment where debt financing through the banking system has remained a much easier and cheaper option. “I am not happy at where the CSE is, but it has come a long way – at the same time it has a long way to go,” he added.

He noted that the present constitution of the CSE is in itself a hindrance to introducing some of the essential reforms. He said that the broker-owned model has done well but a repositioning where the ownership or at least the decision-making mechanism of the CSE needs to be more closely aligned with the interests of its broader group of stakeholders.