by Hiran H.Senewiratne
The Colombo Stock Exchange (SEC) became exceptionally active yesterday due to foreign investor participation reaching approximately 40 percent. Total turnover was Rs 675 million, SEC sources said.
Several major companies including Chevron Lubricant, Distilleries, Sampath Bank and LIOC attracted foreign investors while some foreign investor interest was also shown for John Keells stock as well, Condor Equities Manager Sales Buddhike Payoe told The Island Financial Review.
Yesterday’s momentum in foreign investor participation continued from last Friday, which saw a market turnover of Rs 725 million. Prime Minister Ranil Wickremesinghe’s China tour brought some confidence to investors that more Chinese investors would invest in Sri Lanka, a stockbroker said.
Sri Lanka has one of the lowest participation rates of domestic investors in the capital market, although there are some 765,000 CDS accounts here and foreign participation can be improved well, a well known chartered financial analyst said.
“The number is around 583,000 if you exclude duplication due to joint accounts. A recent study reveals around 350,000 are plantation worker accounts and another 100,000 are students’ accounts that are dormant. So in fact active trading happens in only about 25,000 CDS accounts, explained chartered financial analyst Ravi Abeysuriya who is the president of the Colombo Stock Brokers Association.
‘A government policy change is required with regard to building the capital market. We have to get Sri Lanka into the MSCI Emerging Market Index, which could be a major catalyst to attract foreign investors to our capital market. This can be achieved by listing two large profitable state institutions and establishing a public float of over 20 per cent, he told The Island Financial Review.
“USD 9.5 trillion in assets are estimated to be benchmarked to MSCI indexes. When Sri Lanka is in the index, MSCI Emerging Market Index tracker funds will be required to invest in Sri Lanka as they need to replicate the index, he said.
“With the new government coming to power the foreign investor sentiment has increased in the country. This trend will improve when the public sector entities enter the market with new public sector IPOs, CSE CEO Rajeeva Bandaranayake said.