Financial Times

Net foreign investors don't add to CSE value

By Duruthu Edirimuni Chandrasekera

Net foreign inflows may be the highest ever to-date in the Colombo Stock Exchange (CSE) but the majority of the foreign investors do not 'enhance' the value to the market as they are one time investors, stock analysts said.

Others say this may also be a blessing. "Most these foreign investors are non portfolio investors. They do not bring value to the stock market," a stock analyst said. Up to Tuesday from the January 1, 2008 the net foreign inflow is Rs. 14.8 billion, the highest in a given year in the CSE history. "This figure is the largest so far. Last year - for the entire year - it was Rs. 11.2 billion. Last month alone it was at Rs. 1.1 billion. As at end September it was at Rs. 14.5 billion," Thushara Jayaratne, Manager, Business Development, CSE told The Sunday Times FT.

However the stock analyst noted that this is by far a one time incident mainly due to the three strategic deals this year which brought in much of the foreign inflow. "AMW was sold to Al Futtaims, a Dubai based company. A large stake of Sri Lanka Telecom was sold to GTH, a Malaysian entity and Hotel Services Ltd's controlling stake was sold to a consortium of Singaporeans headed by businessman Nahil Wijesuriya, but these are just 'one time' deals. What we need are the 'real ones', which are portfolio investors," he said.

Some say not having these investors can be a blessing in disguise to the country with the current dire situation in the economy. “The Colombo stock market cannot be much affected by the global financial crisis, as foreign investors have portfolio investments only in Dialog and John Keells Holdings while others are mainly strategic investments which are not for sale in the near future,” Tushan Wickramasinghe, Managing Director Lanka Orix Leasing Securities, said.

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