Most Sri Lankan retail investors are taken for a ride by the biased research reports put out by companies, which is also a major factor that the stock market is now in the doldrums, according to a top researcher.
"Most stock broking firms put out reports that are biased. These research reports on publicly quoted companies are 'sales-driven' rather than based on fundamentals," Chamikara Gunawardane, launching his company, Investor Eye (Pvt) Ltd said.
He said that his company wants to help investors receive and access investment research in both Sinhala and English languages via post, email and Internet.
Mr. Gunawardena said that the company will be the first of its kind where independent investment research of listed companies on the Colombo Stock Exchange along with a pioneering investment rating for investing in Sri Lanka will be made available for th public in both Sinhala and English. He feels that much of the Sri Lankan public has stayed away from Sri Lanka's equity market due to lack of bilingual investment research as well as the absence of independent equity research.
He noted that 'all stock broking firms which put out research' are not independent. "They are not independent in their analysis. This is a major issue - especially in the present market context, where investors don't know the truth," he told the Business Times on the sidelines of the launch.
He added that there's no alternate to stock broker reports and that most stock brokers are too busy to talk to investors (especially small timers). He said that Investor Eye (Pvt) Ltd wants to make all categories of investors more educated and informed before they make an investment decision. Mr. Gunawardane also feels that most investors, particularly the retail investors get their fingers burnt by investing in shares without knowing the specific risks of what they are getting into.
The services available are subscription research, commissioned/fee-based research and investment consulting/investor education. Subscribers will receive a minimum of two corporate research reports a month, global economic and capital market review, local economic and capital market review along with a valuation guide every week, on top of the other periodic research updates.