SEC, CSE in Rs. 40 m joint marketing move to woo more local investors
Monday, 29 July 2013 00:28
More foreign investors to be tapped via road shows in Hong Kong, Singapore, UK, US and Australia
SEC Chief Godahewa reviews capital market progress at meeting with brokers, unit trusts
The Securities and Exchange Commission (SEC) and the Colombo Stock Exchange (CSE) are to roll out a joint marketing initiative worth Rs. 40 million to woo more local investors to capital market.
Initial details of the joint effort were disclosed by SEC Chairman Dr. Nalaka Godahewa last week during a meeting with brokers and unit trusts as part of his regular consultation with industry stakeholders.
The cost of the joint marketing will be shared equally by the SEC and CSE and the focus will be to portray the real attractiveness of the capital market, both listed equities and debt, inculcating investments on fundamentals and promoting unit trusts which is an ideal conduit for less sophisticated retailers.
Requests for expression of interests and proposals are to be called from professional marketing communication agencies shortly.
An effective and nationwide campaign to promote sound investment opportunities in the capital market among the public has been a long standing recommendation from unit trusts and brokers.
Creating greater education and awareness is within the industry-wide accepted medium term 10-point plan championed by the SEC and CSE. The progress of the plan was reviewed at the meeting in addition to obtaining industry feedback.
Last week, speaking at the first ever CFA Sri Lanka Awards, Dr. Godahewa noted that apart from robust regulations, proper awareness and education are also an effective means of ensuring small investor protection.
Following the end of the war, the Colombo stock market has remained resilient. It emerged as the world’s most consistent best performer in 2009 and 2010 before losing steam in 2011 and last year. So far this year, the Colombo Bourse has been positive, up at over 7% though down from double digit gain experienced a few months earlier.
Nevertheless, the most emphatic aspect of the Colombo stock market has been the record net foreign inflows (over Rs. 16 billion year-to-date in 2013 and Rs. 39 billion in 2012) with non-nationals more optimistic of return on their investments than locals.
At the SEC meeting with brokers and unit trusts, the continuous effort to woo more foreign funds was also discussed. The CSE conducted two successful road shows in Mumbai and Dubai early this year, with the third one to be held in Hong Kong in September followed by another in Singapore. London, New York and Australia are some of the destinations planned for next year.
The SEC and CSE are keen to develop the capital market to raise market capitalisation to about $ 50 billion (round 50% of GDP) by 2016 from the current $ 20 billion (30% of GDP). Towards this broader goal, the industry’s 10-point action plan comprises of 1) Attracting more funds (foreign and local); 2) Increasing liquidity in the market; 3) Developing the corporate debt market; 4) Developing new products; 5) Growing the unit trusts market; 6) Promoting education and awareness; 7) Developing trading infrastructure; 8) Strengthening risk management systems; 9) Demutualising the stock exchange and 10) Amending the SEC Act.