Much ado about nothing (so they say… so they say)
View(s):Senior politician and Deputy Finance Minister Sarath Amunugama made an interesting observation recently on the profile of the Colombo stock market.
According to him, less than 1 per cent of Sri Lanka population invests in stocks implying that a big ‘song and dance’ was being made over just a minute segment of the economy.
If the market is not that important, why did the President replace two highly respected individuals – Ms Indrani Sugathadasa and Thilak Karunaratne as chairperson of the Securities and Exchange Commission (SEC) within a space of less than 12 months – and bow to the wishes of a select few from the 1 per cent or less group of investors?
Furthermore why was the media raising hell over the alleged mafia involvement in the stock market? Call it whatever you like (note – the mafia label was given by no less a person than a former head of the SEC), it is abundantly clear and evident that the market was manipulated to suit a chosen few. No one can deny that – least of all the brokers.
So why is the media making a ‘song and dance’ about these nonsensical gyrations in the stock market?
That’s because, and factually whether it’s 1 per cent or less of Sri Lanka’s population (200,000 of 20 million people), a small segment of this group controls the economy. A recent report of a rich-list of Sri Lankans shows that their total worth is over several billions (of rupees).
Most of these rich Sri Lankans are in the stock market and out of that a smaller group controls the market and its dynamics.
A commentary on “Dos and Don’ts” by Ravi Abeysuriya, a professional investment manager unafraid to express his views, published on this page reflects on the happening in the stock market last year and urges honest deals and ethical behaviour in the market in 2013.
He says: “The painful truth is that investor trust in the investment industry has been diminished in recent years be it here in Sri Lanka or globally. Polls have shown that people mistrust financial advisors and believe most are greedy, dishonest and the game is rigged. The root cause of all these problems is a failure of self-control and short-sightedness. The erosion of values and morals of a few have made a whole industry suffer the consequences.”
While Abeysuriya’s ‘courage’ in looking inwards (an example to follow by everyone else including those at the higher echelons of the SEC) and asking questions about the behaviour of those in the industry, is commendable, the reality is that everything what he says has been reported by the financial press.
For example, his list of New Year resolutions for the industry includes a commitment by the Brokers Association to ensure their code of ethics and professional conduct is strictly enforced; place the client’s interests before your own; name and shame unethical behaviour; advocate for stronger regulations that protect investors (big or small); act with integrity 24/7 – not just at the office; encourage young professionals to have the courage to disagree; always be honest with clients; never offer kickbacks or engage in misleading sales promotions to win business; make investment recommendations based on strong analysis not on rumours; openly share bad news with all who are affected; take responsibility for the actions of your team; help financial journalists to report the true position of companies you follow; and bring to justice those who take part in irresponsible and illegal activities.
The financial press has reported all these concerns and more. But how have big investors and the new hierarchy of the SEC responded? By accusing the media of creating a fear psychosis and that the use of the word ‘mafia’ is scaring off foreign investors.
Rather than taking swipes at the media for the crisis in the market which is yet to recover, for different reasons though, the SEC, Colombo Stock Exchange and the industry should look inwards and clean the augean stables before the horse (corrupt investors and their ‘henchiyas’ in high places) bolts.
Thus our resolution for the year is that those who run the stock market and are responsible for guiding investors should look inwards and ensure, as Ravi Abeysuriya says with a quote from Mahatma Gandhi that: “If you want to change the world, you must begin with yourself. You must first become the change that you want to see in the world”.
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