The Colombo Stock Exchange (CSE) has been performing significantly during the past two years becoming one of the top performing markets in the world. The total turnover of the CSE during last year recorded over Rs 570 billion and with high levels of investor confidence the total turnover for the first two months of this year has recorded over Rs 127 billion.
The Securities and Exchange Commission (SEC) Chairperson, Indrani Sugathadasa said the market is performing outstandingly. The market has recorded a total turnover of over Rs 127 billion during only the first two months. Thus, the SEC cannot predict the expanding development of the capital market in the end of the year. She said this, at a press conference held at the SEC yesterday.
After monitoring the activities of the CSE, the SEC will lift the 50 percent upfront deposit for price band stocks and the price band duration on share trading is reduced from 15 days to 10 days with effect from March first, Sugathadasa said.
In April the SEC is planning to conduct several road shows in provincial cities such as Kandy, Matara, Kurunegala, Jaffna, Kilinochchi, Trincomalee, Galle and Anuradhaprura. There are also plans to have road shows overseas in the middle of the year. SEC Director General, Malik Cader said although some of the parties say that the net foreign outflow is rising according to the Central Bank the money has not gone out of the country. However, the money has gone out of the market, yet it has been invested in some other project within the country.
With around 10 companies to be listed in the CSE by March there will be two to three companies with large amounts like Rs five billion each in the market.
These activities indeed build up the confidence levels of both local and foreign investors. Next couple of months will be excellent for the investors and there is much potential to attract large foreign investors to the Colombo bourse with the upcoming Initial Public Offerings (IPOs), he said.
At present the Price Earning ratio (P/E ratio) is high as it is calculated based results of March last year. However, the analysts expect that the P/E ratio will be below 20 by March.
The SEC is expecting to finalize the cross board tradings very soon and is looking at entering niche markets, he said.
Speaking to Daily News Business, Stock Brokers Association President, Shriyan Gurusinghe said that they welcome the direction made by the SEC by becoming more flexible and it is an encouraging move.
The brokers have been inquiring about the price band for some time basically as it avoids the technical concerns that the broker community has to face. It also removes the discrimination between the retail and high net worth investors who have custodian-banking facilities, he said.
The directive also gives a optimistic indication for the retail segment as they can freely participate without paying an advance. The directive is not only benefiting to a certain segment of the market, but it will positively impact on the entire industry, Gurusinghe said.
source - www.lankanewspapers.com
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