The Colombo Stock Exchange (CSE) performed tremendously while growing at a faster pace. However, to sustain in the market there is room for capital market development, LR Global Principal Don LaGuardia said at a recently held forum. He said some of the mature markets in the region have more than 120 percent of revenue as a percent of Gross Domestic Production (GDP) from listed companies.
"Using India as Sri Lanka's benchmark by assuming a similar corporate earnings profile and valuations, we would expect to see, at a minimum, US $ 15 billion of corporate revenues listed in the CSE, he said. Construction, manufacturing, transport and trading companies are underrepresented in the CSE.
On the positive side, companies are looking to list in the CSE and are working towards standardizing their operating and financial reporting procedures to meet the CSE listing requirements.
The construction boom following the integration of the Northern and Eastern provinces with the rest of the country, these two provinces account for 10 to 15 percent of the population, 30 percent of land mass and 50 percent of coastline.
There is a remarkable increase in number of tourist arrivals to the country. In the first half of this year, Sri Lanka's tourist arrivals were 49 percent on year-on-year (YOY) basis, while in Asia and the Pacific it was 14 percent YOY.
The tourism industry is identified as a key thrust area and the country should harness this important facet. The increase in economic activity due to ports expansion will benefit the entire economy in a bigger scope.
On average, 200 to 300 merchant ships sail past Sri Lanka daily.
However, only about 12 to 15 call on Sri Lanka currently.
With the development in the ports the country will have a greater possibility of attracting them.
"The future growth drives are not built on a labour arbitrate strategy, but on value addition to the global supply chain, tourism and playing catch up for 30-years of infrastructure spending," LaGuardia said.
The definition of a frontier market is that they are smaller and less accessible markets of the developing world (distinct sub-class) from traditional such as emerging markets and Sri Lanka is now in it.
To achieve a stabilized rapid growth Sri Lanka needs to have a political stability of at least five years.
The current political stability in the country has been able to attract investors locally and internationally, which is essential for a country that is emerging outstandingly after 30-year war.
"The progress of the country is excellent and we hope that the improvement momentum will keep improving further, as Sri Lanka is on the correct path," LaGuardia said.
source - www.dailynews.lk
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