Following are excerpts from an interview with CIMB Group Deputy CEO and CIMB Investment bank CEO Dato’ Charon Wardini Mokhzani following the tie up between CIMB Group and John Keells Stock Brokers early this week.
Q: Can you explain the tie up with John Keells Stock Brokers?
A: This partnership with John Keells Stock Brokers is a strategic collaboration to market Sri Lankan equities via CIMB’s global equity sales distribution network as well as co-branded research on Sri Lankan equities to be distributed to our client base globally.
Q: Why did CIMB select JKSB?
A: There are many reasons for selecting JKSB. Firstly, as a leading stock broking firm in Sri Lanka, JKSB has a very strong foreign and local institutional client base. Secondly, it has clear focus on institutional investors and experience in dealing with foreign institutional clients. Thirdly, JKSB has a strong research team with very good research products. Finally, JKSB, as part of the JKH Group, the largest company on the Colombo Stock Exchange, has good governance and internal compliance in place.
Q: What will CIMB bring to Sri Lanka via this partnership?
A: As a leading ASEAN bank, CIMB will provide JKSB access to foreign clientele and we believe this partnership will result in JKSB and the Sri Lankan market benefiting from increased visibility, particularly in the ASEAN region where CIMB continues to rank as the top player.
As a regional player, CIMB is also notable in its research and will be able to provide technical input to enhance the research product.
Q: What prompted CIMB to enter in to such an arrangement?
A: At CIMB, we have looked at a phased entry in to the financial services industry in Sri Lanka. Our investment banking advisory office has just opened, and to follow on with securities which is a complimentary business, is only logical.
We have always wanted to work in partnership with a well established stock broking firm, and we believe that working with JKSB will facilitate trade and investments for CIMB’s clients as well as between Sri Lanka and ASEAN.
Our clients have shown interest in investing in Sri Lanka, and we strongly believe the outlook is bright for the country. Sri Lanka has had experienced significant economic development and is supported by a good regulatory and policy environment including strong incentives provided by the Government.
Q: Is this move part of CIMB’s recently announced plans to expand further in Asia or in South Asia in particular?
A: Yes, it is part of CIMB’s move to build and provide linkages between ASEAN and South Asia for the facilitation of trade and investment flows.
CIMB wants to be part of Sri Lanka’s South Asian hub for commerce. As the first international investment bank to open a local office in Sri Lanka, we are uniquely positioned to help not just our Malaysian clients but our ASEAN clients to take advantage of the investment opportunity presented in this new and exciting emerging economy.
Q: What prospects does CIMB see in Sri Lankan capital markets in particular and in Sri Lanka in general?
A: After nearly three decades of conflict, Sri Lanka is now growing into a high growth emerging market. This new phase of accelerated development and growth is underpinned by political stability, a favourable investment platform - especially for foreign investment, and strong socio-economic fundamentals.
We believe that Sri Lanka is on the cusp of tremendous growth, and has the potential to provide significant returns to investors. Many of our ASEAN clients are already present there, and we would like to encourage more to look towards this dynamic nation as a positive long term investment destination.
We are of the opinion that Sri Lanka has emerged and note that has been identified by the international business community as the country to take note. We expect Sri Lankan companies and the Colombo Stock Exchange to grow, and trust this partnership will create a positive impact on the economy and the financial services sector.
The country is on a high growth trajectory supported by sound macro-economic fundamentals. It is also poised to emerge as a major global hub in the South Asian region for trade, logistics, investment, communications, and financial services. There isn’t a better time for ASEAN countries to enter Sri Lanka.
Q: What should Sri Lanka do to rapidly develop its capital market?
A: In the first full year, Sri Lanka’s post-war average GDP growth rose to 8% (2010) – the highest in 3 decades - while maintaining single digit inflation over the last 3 years and lowering unemployment to 4.3% (2010). In addition to this, Sri Lanka is poised to maintain 7-8% real GDP growth over the next 5 years.
The positive market activity reflects the new trajectory that has been forged for economic growth in Sri Lanka.
However, in order to further develop its capital market, we are of the opinion that there could be more listings - including that of some state institutions as well as of more debt.
There is currently a very small corporate debt market.
Q: Is CIMB exploring opportunities in other segments of the financial services industry of Sri Lanka? If yes, what segments?
A: We are currently exploring various opportunities within the capital market.