CSBA calls for a fair and active market in 2016

• Awaits promised reforms to be implemented soon
• Says maintaining Rupee at stable levels critical to attract foreign investors

By Charumini de Silva

With the dawn of the New Year, the Colombo Stock Brokers Association (CSBA) is calling for a fair and an active capital market for both local and foreign investors to enjoy decent returns in 2016.

The CSBA is also looking forward to promised reforms being implemented in the immediate future for the market to gain its trust and confidence.

“I think everyone is eagerly waiting for the new Securities and Exchange Commission (SEC) Act and other proposed instruments to be implemented soon to further expand the market,” CSBA President Ravi Abyesuriya said.  

He said that long term institutional funds such as provident funds and insurance companies need to be active.

“It is vital to get the state owned enterprises (SOEs) and the non-core businesses listed in the Colombo Stock Exchange (CSE) to attract more funds for the growth of the market,” he pointed out.

Noting that the decision of People’s Insurance Ltd to enter the capital market would definitely be a significant milestone in the CSE this year, he added that it has been appropriately priced as well.  

Despite the negative growth recorded in the capital market last year, all the companies have performed remarkably well with strong bottom lines. However, the volumes were significantly low compared to 2014, he added.  

Noting that the Sri Lankan Rupee depreciated by 8.8% against the US dollar in 2015 due to  domestic and global developments he emphasised the need to  maintain the rupee at stable levels. 

“Maintaining the Rupee at stable levels is critical for Sri Lanka to attract foreign investors and if that is in controllable levels there is no reason why the CSE cannot attract good foreign investors,” Abeysuriya pointed out. 

CSE hopeful of turnaround

After suffering the first negative return in three years in 2015, the Colombo Stock Exchange is confident of a turnaround in 2016.

“We are hopeful that the market would turnaround by end of this year or by early next year,” CSE Chief Executive Officer Rajeeva Bandaranaike told the Daily FT.

He said that the negative performance in 2015 was due to both internal and external factors.



 “Market performance was not encouraging with drops in indices and volumes. The performance could be attributed to 2015 being an election year and due to local and global economic conditions. However, many significant and important market development activities were initiated during the course of 2015,” the CEO said.

Among many development initiatives the key developments during the year 2015 include the initiation of the two-year project to introduce delivery versus payment (DVP) and a central counter party (CCP) system with a view to minimising the asset commitment risk and settlement risk in the market and the initiation of a project to amend the SEC Act by a special committee set up by the SEC.