CAL Head of Research Udeeshan Jonas
The second South Asia Investment Conference (SAIC) jointly organised by Capital Alliance Securities Ltd. (CAL), AKD Securities and Lanka Bangla Securities Ltd. was successfully held in Singapore this week.
The conference played host to round-the-clock meetings attracting over 100 participants. Included herein were institutional investors from seven countries and some of South Asia’s top listed companies.
South Asia is considered to be the fastest-growing region in the next 10 years. In this context, the objective of the forum was to present Sri Lanka, Bangladesh and Pakistan as a singular collective investment destination. “South Asia’s frontier countries needed more prominence. By considering the relative scale of these countries, a combined conference was the best way to attract investors,” said CAL Managing Director – Global Markets Deshan Pushparajah.
The conference also saw keynotes and Q&A sessions where representatives of each country presented their economic outlook and investment prospects.
Lee Kuan Yew School of Public Policy, National University of Singapore Associate Professor and former Institute of Policy Studies Chairman Razeen Sally speaking at the event highlighted that further stabilisation of the economy through better debt management, improved ease of doing business and abolition of para tariffs were the urgent policy requirements needed to accelerate Sri Lanka’s economic growth to 6-8% levels. “I think that these reforms would be enough to deliver a significant boost to growth. The political question is whether Sri Lanka can go from ‘no reform’ to some reform?” he said.
Professor Sally also added that the main area Sri Lanka could leverage growth in is through its ports and logistics sector. “Sri Lanka has every possibility to become the South Asia hub in shipping and logistics, if it can get some simple reforms through. The geography is just right, placed between Singapore and Dubai along the Asian trade route. By opening the market to shippers, shipping agents, and building the connectivity around it, Sri Lanka could attract the ancillary services needed to create an eco-system of logistics in quick time. This should be done not with the Sri Lankan market in mind but with the bigger South Asian market in mind.”
Bangladesh is expected to be the fastest-growing economy in South Asia in 2019. Much of its $ 300 b economy was achieved in the last decade. “If growth continues in the same phase in the next five years it will be half a trillion dollars,” said Dhaka Stock Exchange Managing Director Majedur Rahman. The country also boasts a robust exports sector led by its apparel industry, which is expected to drive its total exports by 10% this year.
In respect to Bangladesh’s capital markets, Rahman expressed that recent issues in liquidity has caused a reduction in volume and value traded in its exchange which he partially ascribed to the high levels of non-performing loans in the banking industry. “Bangladesh private sector has grown faster than regulators can catch up with. Naturally, this creates lapses in governance and regulation. As a result the banking industry’s liberal handing out of loans have caused concern,” he said. “To address this, the government has requested to maintain at least 85% asset-deposit ratio. Many banks used to exceed more than 90%, but most banks have bridged the gap. And the end of the year I’m hoping it would be a much better scenario for banks.”
In the keynote presentation on Pakistan, Pakistan Stock Exchange Ltd. Chairman Sulaiman Mehdi said the country’s benchmark index Karachi Stock Exchange 100 provided a USD adjusted return of 82.6% compared to 9.5% return of the MSCI emerging market index. He also added that with the IMF stipulated fiscal reforms, and due to inversion of the yield curve, investors have now started reverting into the Pakistan stock exchange.