The Colombo Stock Exchange yesterday revealed its plans to become the world's number one performing market this year-being the second best performing market both in 2009 and 2010-with an estimated market capitalization of Rs. 3 trillion.
According to Sri Lanka's Securities and Exchange Commission Chairperson, Indrani Sugathadasa, the stock market will be able to achieve this target with a plethora of local companies planning to go public this year.
"We expect about 50 to 60 new Initial Public Offerings (IPOs) this year with 25 finance companies going public as per Central Bank's directive. In fact some of the IPOs expected are quite big" Sugathadasa said.
Commenting on the market's performance in 2010 she said that Annual Turnover has grown 300 percent and the growth in capitalization has been 102 percent against the growth in 2009, which is 123 percent.
When asked about the issue of the 10 percent price band, which according to some is a detriment to a growing market but for others a tool that will rule out over speculation and protect the average investor, she averred that the watchdog is following a 'wait and see' approach regarding it.
However no clear indication was given over the fate of the price band.
On the trend of declining foreign participation in the Colombo bourse Sugathadasa maintained that she is not worried about it since the local investors were extremely active in driving the market ahead.
"In fact one of the key reasons for a foreign outflow is foreigners are cashing out taking the improved sentiments of the market" SEC Director General, Malik Cader said complementing the Chairperson's remark.
"Anyway we are hopeful that year 2011 will record a net foreign inflow" he added.
Further elaborating on the SEC's plans for the capital market in 2011-2013, Sugathadasa said that they are going ahead with setting up a commodities exchange and facilitate derivatives trading. (Read the SEC Chairperson's full presentation on Page 3)
Continued price bands and restrictions on broker credit violate peoples’ constitutional rights- Jafferjee
According to Murtaza Jafferjee, head of the local stockbroking firm JB Securities, the 10 percent price band imposed by the market watchdog and the restrictions on broker credit facilities is a violation of the constitutional rights of the people, although SEC identifies these as key developments in 2010.
He said that price bands should only be imposed as a temporary measure to reduce systemic risk and over-speculation.
"You have to find out the reasons for over speculation and remedy that. When the interest rates are going down this way, you will have to expect over speculation in the market" Jaferjee said. He also noted that regulatory restrictions on brokers providing credits together with price bands will generate an outcome that neither the regulator nor the Colombo Stock Exchange wants.
source - www.dailymirror.lk
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