Capital raised via Bourse booms to record Rs. 119.4 b
Thursday, 2 January 2014 00:00
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Amount raised in 2013 was up 300% over 2012 and surpasses even the 2010-09 bull run years and active 2011; corporate debt figure high with a record Rs. 68.3 b raised
Colombo Bourse 6th best performing Asian market with 4.8% return in 2013, ending two years of negative returns
Over 50 companies deliver total return of 15%+ y-o-y; 26 firms top with over 30% return
Net foreign inflow a robust Rs. 34.1 b on top of record Rs. 40.3 b in 2012
The Colombo stock market last year played perfect host for raising of fresh capital, with an all-time high figure of Rs. 119.4 billion recorded.
This was a significant achievement for the Colombo Bourse in 2013, which also ended the two-year negative run by posting a modest but welcome gain of 4.8%. The latter placed the Colombo Stock Exchange (CSE) as the sixth best performing within Asia. In terms of the blue chip S&P SL 20 Index, the growth was higher at 5.79%.
Most analysts viewed these two achievements, along with record raising of debt worth Rs. 68.3 billion and net foreign inflow of Rs. 34.1 billion, as testimony of a major turnaround for the CSE after having been bruised by various allegations in 2011 and 2012. In those two years, the market was down by 7% and 8.5% after two record-setting returns of 96% and 125% in 2010 and 2009 respectively.
Of the capital raised, corporate debt made a record contribution of Rs. 68.3 billion, which was a direct result of incentives offered by the Government via the 2013 Budget. Rights Issues raised over Rs. 24 billion by end November, according to data supplied separately by the Securities and Exchange Commission. It said total capital raised during the year ending November 2013 was a massive 159% increase to Rs. 65.6 billion.
In 2012, the total capital raised was Rs. 29.58 billion, whilst in 2011 it was Rs. 60.3 billion and Rs. 44.5 billion in 2010.
The market also witnessed certain selected stocks performing exceptionally, providing high yields to investors who diversified their investments over a range of equities. A total of 57 companies have given a total return in excess of 15% year-on-year for 2013 (with 26 companies giving a return above 30% and 31 companies giving a return between 15 to 30%).
This reiterated that CSE in 2013 was safe and sound to provide attractive returns.
Most investors shunned the market over lack of confidence, despite 2013 experiencing a downward trend in interest rates.
Bank interest rates decreased during the course of the year, following a directive by the Central Bank of Sri Lanka to tighten monetary policy; interest rates (Average Weighted Fixed Deposit Rate) have dropped from 13.21% on 31 December 2012 to 11.96% as at 29 November 2013.
Likely continuity in the downward path of interest rates as well as sound returns by select stocks last year have prompted most analysts to rate the CSE to be more attractive in 2014, apart from predicting higher growth.
The CSE also continued to attract foreign investors with a net foreign inflow of Rs. 34.1 billion (excluding the net flow for corporate debt), building on the net foreign inflow of 2012 at Rs. 40.3 billion. This was supported by Sri Lanka’s higher positioning in regional capital markets, being one of the top performers within the region ahead of the Singapore Stock Exchange, the Bombay Stock Exchange and the Hong Kong Stock Exchange.
The turnaround in the capital market was also encouraged by greater unity and cooperation among all stakeholders, who rallied around the 10-point key initiatives championed by the SEC and supported by the CSE as well as the Colombo Stock Brokers Association.
