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| SEC Chairman Viraj Dayaratne PC
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Encouraged by consistent and credible upturn and improved outlook for listed equities and debt, the Securities and Exchange Commission (SEC) has renewed its effort to take the proposition of investing
in the stock market to the villages.
The capital markets regulator SEC along with the Colombo Stock Exchange (CSE) will conduct comprehensive investor education and promotion public events in Kandy, Matara, Kurunegala in Sinhala, in Jaffna in Tamil starting from late April to end June.
SEC Chairman Viraj Dayaratne PC told the Daily FT that the renewed exercise is based on the resilient performance of the Colombo stock market since mid-2020 and attractive opportunities available for new investors.
“We want more people to come to the stock market but do so well-informed with qualified and professional advice,” Dayaratne emphasised. “The buyer must be aware,” he said adding that “gains and dips are natural characteristics of a vibrant stock market”.
Year to date, the Colombo stock market has offered a 9.4% return in terms of movement in the All Share Price Index (ASPI) and 13.8% in terms of the S&PSL20 Index. This is on top of 10.5% gain in 2020 by ASPI.
Given the low interest rate regime, most analysts have recommended investing in listed equities whilst brokers have confirmed a public shift towards the stock market.
In 2020, turnover was Rs. 397 billion, up from Rs. 171 billion in 2019. In 1Q of 2021 turnover of Rs. 324.4 billion was higher by 518% whilst the number of shares traded 17.65 billion reflects a massive jump of 1,210%. In the 1Q of 2021, the ASPI has risen by 55.8% in comparison to 1Q of 2020. The S&PSL20 has risen by 46.4% whilst the market capitalisation has increased by 46.2% to Rs. 3.11 trillion.
The 1Q of 2021 was boosted by a massive 30% gain by both indices in record-setting January as February and March saw declines.
Dayaratne said in recent months there have been over 20,000 new accounts opened whilst CSE’s new user friendly mobile app has seen over 50,000 downloads.
According to the CSE, last year there was a significant increase in CDS account openings with 17,600 new investors entering the market, which was 70% higher than the number of new investors in 2019 and 56% higher than 2018. Local investors contributed to approximately 79% of the total market turnover in 2020, which is higher when compared to approximately 63% in 2019 and 55% the year prior to that.
Last year also saw greater interest among younger investors in the retail segment, with 46% of the total accounts opened being attributed to the 18-30 age group. CSED said this marked an interesting development considering the fact that a large portion of retail stock market investors have traditionally been above 50 years of age.
