Triple Trillion

With new listings and equities route for financing SEC says market capitalisation will rise by 50% this year and 20% per annum thereafter

Securities and Exchange Commission Chairperson Ms. Indrani Sugathadasa addresses the stakeholders’ forum yesterday. Commissioners Sujeewa Mudalige (right), Priyantha Jayawardana and Director General Malik Cader (left) are also present - Pic by Upul Abayasekara

The Securities and Exchange Commission (SEC) yesterday expressed confidence that the market capitalisation of the Colombo Stock Exchange will rise to Rs. 3 trillion this year from the current Rs 2 trillion.

“We anticipate that market capitalisation will increase to Rs. 3 trillion by 2011 from the current Rs. 2 trillion. From 2011 onwards, market capitalisation is expected to increase at least by 20% per annum,” SEC Chairperson Indrani Sugathadasa told a forum of capital market stakeholders over breakfast yesterday.

The rise in market capitalisation is expected to be achieved due to several factors. One was within a macroeconomic environment of high GDP growth and low inflation supported by fiscal discipline and political stability in Sri Lanka, more companies and infrastructure projects will consider financing their projects through the equity market.

“We expect around 50 to 60 new companies (of which approximately 25 finance companies as directed by the Central Bank of Sri Lanka) will be listed on CSE in 2011,” Sugathadasa disclosed.

“By attracting more companies to list on the stock market, we can increase this contribution.

The CSE needs more large scale companies to list to generate volumes to cater to large scale foreign investors. That will serve as a positive indicator of the growth momentum of an economy,” the SEC Chief added.

She said that the capital market contribution is around 40% of the country’s GDP compared to markets of developed countries, which is over 100% of the GDP.

Noting that for two successive years Colombo has been Asia’s best performing and the world’s second best, the SEC Chief reiterated that post-war, Sri Lanka is poised to take off in 2011.

“The stock exchange, as an indicator, speaks for the economy’s health and prospects for the local and foreign investors. President Mahinda Rajapaksa has opened the door for foreign investors to invest in Sri Lanka and the country’s political stability provides immense confidence to both local and foreign investors,” she pointed out.

Reiterating SEC’s resolve to build the capital market and set it on a strong foundation over the next few years, Sugathadasa said this contribute towards the President’s efforts of placing Sri Lanka as the emerging ‘Wonder of Asia.’”

“Let us work together as an industry to achieve this,” the SEC Chief, flanked by other Commissioners and the Director General, told the forum attended by senior officials from the CSE, representatives of stock broking firms, unit trusts, listed companies, minority shareholder lobby groups and the media.

Sugathadasa also listed SEC’s five strategic goals towards achieving the broader agenda. One is facilitating improvements in the capital market infrastructure and the other was facilitating improvements in liquidity and introduction of new products in the capital market.

The SEC will also encourage and facilitate the widening and broadening of the issuer base in addition to facilitating the widening and broadening of the investor base. Internally, SEC will also enhance its own performance through effective alignment and management of human, information, and financial capital.

“Successful implementation of all these initiatives can only be achieved through extensive support from the stakeholders,” the SEC Chairperson said, adding that the Commissioners look forward to continued cooperation from all.