Business Times

CSE will remain small market

Unless liquidity increases, profitable enough for major international investors
Business Times panel discussion
By Duruthu Edirimuni Chandrasekera, Pic by J. Weerasekera

Stakeholders at the Colombo bourse are calling for increased liquidity in the market to attract major international funds and investors saying unless this happens Colombo will remain a place attracting just small players.

“The Colombo Stock Exchange (CSE) increased by 130% last year and was the second best performer in the world, but it was mostly driven by local investors and significant public institutional investors. There was Rs 800 million last year in foreign outflows and they were net sellers. During the past two months they were net sellers of about Rs 2-3 billion and still counting. Despite all the hype, we are only a dot - our market capitalisation is Rs. 110 billion, which is the size of one large Indian company,” Channa Amaratunga, Director CT Capital told an exclusive panel discussion on the stockmarket organised by the Business Times on Wednesday.

Panel discussion in progress. From left - Channa Amaratunga, Vajira Kulatilaka and Thilan Wijesinghe (speaking).

He said that the main difficulty in converting foreign investor interest to the CSE is the lack of market liquidity adding that only John Keells Holdings (JKH) attracts investors. “Firms such as Sri Lanka Telecom have only 3% free float. A serious foreign investor is interested in firms that have material size and in exchanges which have liquidity,” he said, adding that till this issue is addressed, the CSE will remain the domain of small timers. He noted that post-war there have been many listings, but that their sizes are not attractive.

“Firms with decent size and is liquid matter to foreign investors. So nine out of 10 will buy JKH, not because it’s the best company but because of its free float and the fact that it has no single controlling investor.” Referring to the regulatory environment, Mr. Amaratunga noted that manipulation in trading has happened in the most blatant form during the past few months and the Securities and Exchange Commission should take immediate steps to stop it.

Vajira Kulatilaka, CEO NDB Investment Banking Cluster told the discussion held at the Wijeya Newspapers Ltd auditorium that with 30 years of war out of the way, the sentiments of the people have risen considerably.

“There’s huge energy in people. The past cannot be a reflection of the future. At the same time, the Government should outline a proper investment policy and give the right signals to the community. For instance when we approach people to list their firms, they are afraid that they'll get taxed. These uncertainties should be eradicated,” he noted. He said now Sri Lanka is the safest country in the region and the Government has a lot do to achieve 10% growth.

Thilan Wijesinghe, Group Managing Director of Overseas Realty Ceylon Ltd said that the CSE is on the periphery of stock exchanges due to liquidity issues, and that there are a host of listed firms which have only one entity – such as a land, a building, etc. “There should be more mergers and acquisitions and build up of more critical mass to create big entities,” he said. He also said there has been a deterioration of telecom companies from all profit making to all loss making during the years mainly due to the bad regulatory environment.

He said that one way to address poor liquidity is to ensure that foreign banks are publicly listed (similar to what happens abroad). “They should be made to divest or list 49% of their shares locally.”
Mr Wijesinghe, whose company owns the World Trade Centre and the mega Havelock City apartment complex, said that the property market is moving outside Colombo due to tourism and agriculture and that the East coast prices have doubled. “In terms of the property market, the outlook is very bullish,” he said, adding that property will play a big part in growth.

Top to the page  |  E-mail  |  views[1]
SocialTwist Tell-a-Friend
Other Business Times Articles
CSE will remain small market
SLIC gets Central Bank sanction to buy over 10% of NDB
CB/EPF stakes in banks: Conflict of interests?
Top banks, Indian firm aim for broking licenses
No passengers to Jaffna? Airlines withdraw
Finance firms may not be attractive in the long –term
Change at the top
Comment - New strategy to attract investments
Feature - Longevity risk: Death of retirement?
Feature - Additional income from rubber plantations and new carbon negative concept
Singer rebrands to ‘Singer Homes’ from ‘Modern Homes’
Derivatives anideal product in post-war economy
Seylan Bank AGM held on Friday
5,000 kgs of tea withdrawn from domestic market last week
UNP puts its economic view online
Computer firm Ezy aims to raise Rs 100 mln by 2015 for its new racing segment
SL Convention Bureau promotion in the Far East
Hedging Cases: Deutsche Bank claim in international arbitration in July
Knowledge Conglomerate to launch ventures
DHL Keells positive on Sri Lankan growth
Credit Card helps eliminate risk in carrying cash
Globalisation led to 'knowledge economy' : Chief Justice
Solid response to NTB’s 2010 warrants (shares)
Sri Lankans have limited access to their own seas-industrialist
AMW Obtains IMI Accreditation – first in South East Asia
Taj Hotel group opens regional skills centre in Colombo
SLT ranked number one in Top 10 competition
HSBC cash for special clients thro’ Keells Super
Sri Lankan economy set to grow –Asian investors told
Fiscal deficit causes IMF to delay loan
Groundwork of pruning the cabinet gets underway
Bank of Ceylon to open 31 more branches in the North and East
Lumiére Residencies receives CMA certification
IFS signs US-government prime contractor Sabreliner
Eight Kurunegala poultry farmers receive assistance
Israel to 'enhance' economic ties with SL
Heritance Ahungalla organises Six-a-Side Beach Cricket Tournament
Dialog receives award for M-waste Management
Corporate climate responsibility - Case for a green economy
Former Malaysian PM Mahathir here in June for business event
Only 0.14% of SL GDP towards R&D, others 1.5%
Column - The office: Paperless and work on the move
New SKAL committee
Fitch affirms rating on Singer
Lanka Ceramic sales pick up after showroom upgrade
Global Finance picks Commercial Bank as Sri Lanka’s best for 12th year in a row
Oracle solutions for mid-sized Sri Lankan companies


Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 2010 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved.| Site best viewed in IE ver 6.0 @ 1024 x 768 resolution