Everybody working towards a vibrant capital market: CSE official
Colombo Stock Exchange (CSE) Head of Market Development Niroshan Wijesundera talks about the market development activities carried out by the CSE to make Sri Lanka’s capital market among the best in the world.
Q: What were the market development and investor awareness activities the CSE carried out during the first six months of 2013?
One of the ten key projects jointly spearheaded by the Securities and Exchange Commission (SEC) and CSE is to attract foreign and local funds. In this regard, two investor forums were conducted in Mumbai and Dubai during February and June this year.
The CSE opened the sixth branch office in Anuradhapura on March 28, 2013, with a view to provide awareness and education to investors in the North Central Province and showcase the opportunities available for investors to invest in shares and corporate debts listed on the CSE.
The CSE continued to create awareness and provide investor education to the existing and potential investors. During the first six months of the year, the CSE conducted programmes in 67 schools, where approximately 3800 advanced level (A/L) students were educated.
The CSE believes in providing educational sessions for A/L students for whom ‘capital market’ is a part of their school curriculum. Furthermore, 13 educational programmes were conducted in universities, where approximately 1000 final year students were educated on the Sri Lankan capital market.
The CSE also conducted eight educational programmes (five-day programmes) for investors in different regions of the country.
The CSE has also conducted six investor day awareness programmes, thereby creating awareness among 1500 potential and existing investors on investing in the capital market.
Furthermore, six educational workshops were conducted to educate investors on corporate debt. The CSE has also upgraded its debt trading platform.
Q: How successful were the two foreign roadshows the CSE held in collaboration with the SEC?
The main focus of the investor forums was to highlight and showcase Sri Lanka’s growth potential and evaluate the country’s equity market value proposition.
The events were attended by over 150 fund managers and high net worth individuals with commercial and economic interests in Sri Lanka.
The success of the foreign roadshows cannot be measured immediately as the benefits would be reaped over short to medium term. With the end of the 30-year war, Sri Lanka has the potential to make its economy to grow faster than any other country in the Asian region. Hence, we need to be out there showcasing the Sri Lankan capital market. However, it should be noted that there is a continuous inflow of funds by foreign investors. In 2013 YTD, the net foreign inflow is Rs.16.3 billion.
We do have certain limitations in the capital market in Sri Lanka. However, the SEC, CSE and other stakeholders are working together to overcome these limitation. A few such examples are to improve the liquidity, corporate debt market, etc.
Q: Can you tell us something about the upcoming roadshow in Hong Kong?
The investor forum in Hong Kong will be held on September 9 at Island Shangri La. The investor forum is in association with Bloomberg data services. The interest in participation is gradually increasing with major funds registering for the investor forum.
Q: How many brokers and listed entities have confirmed their participation by now? Who are they?
The eleven broker firms who have confirmed participation are Acuity Stockbrokers, Capital TRUST Securities, CT Smith Stockbrokers, DNH Financial, Condor Equities, IIFL, John Keells Stockbrokers, Lanka Securities, LOLC Securities, Nation Lanka Equities and Softlogic Stockbrokers.
The ten listed companies who have confirmed participation are Access Engineering PLC, Ceylinco Insurance PLC, Commercial Bank of Ceylon PLC, DFCC Bank, Dialog Axiata PLC, Distilleries Company of Sri Lanka PLC, John Keells Holdings PLC, Nations Trust Bank PLC, People’s Leasing & Finance PLC and Tokyo Cement Company (Lanka) PLC. Q: It seems that investor education in the regions is lacking despite the CSE having branches in places such as Anuradhapura, Kurunegala, Matara, etc. How are you planning to address this issue?
One of the main objectives of the branch network is to provide regional awareness and investor education. In this context, the ‘investor’ includes the existing investor and potential investors. The ‘potential investor’ includes investors who can be brought to the market immediately and the investor who would become investors in the future, such as students of universities and other higher educational institutions.
Investor participation towards equity investments, especially by retail investors is seasonal. This is true across the world. There may be some macroeconomic movements that keep investors away from investing in equities. One such example is significantly higher interest rates banks offer for depository. Sri Lanka currently experiences the same.
In this context, the CSE experienced a temporal decline in participation at our educational programmes. The CSE strongly believes that investor education is something that is essential in order to be a successful investor in the equity market. Therefore, the CSE strives to provide the best education to investors. In our programmes, the CSE uses the best resource persons and always take feedback from participants to ensure there are continuous improvements.
The CSE is working hand in hand with regional business associations such as trade associations and local chambers of commerce to provide education to the members of such organisations.
Last July, the CSE and Amba Research Lanka entered into an Exchange Sponsored Research Programme to improve the quality of research on listed companies. This helps local and foreign investors to take better informed investment decisions.
Q: What is the biggest impediment you see in the country in creating investor awareness?
The importance of personal finance planning and investments could have been included in the school curriculum. Recently, it was included only in the Advance Level Commerce stream. It should have been included in all the streams even before A/Ls. Had we done so, today we would have had a financially literate adult population.
The President is also of the view that the CSE should take the benefits of the capital market to the villages so they too could be a part of the growth story. In this regard, during this year, the CSE has embarked on opening three new branches in Anuradhapura, Ratnapura and Hambantota.
The CSE opened the Anuradhapura branch in March 2013 and the Hambantota and Ratnapura branches will be opened shortly. Through the CSE branches we would educate investors on investments in equity and corporate debt. Likewise, we are addressing the biggest impediment in creating investor awareness, which is lack of local presence of the CSE, by opening new branches.
Q: What are the future programmes the CSE has in the pipeline to develop the capital market?
Subsequent to the investor forum in Hong Kong, the SEC and CSE have jointly identified a few countries that we should conduct investor forums, such as Singapore, Australia, London and New York. The Sri Lankan diaspora and foreign fund managers would be targeted during these investor forums.
Furthermore, the CSE identified the growth in demand for android phones. In this regard, a CSE mobile app would be launched shortly which would enable investors to gain access to the CSE even being on the move.
The CSE would conduct various programmes to encourage new listings in equity and debt to the CSE, thus increasing liquidity in the market.
The SEC and CSE would be jointly embarking on an advertising campaign shortly to create awareness and attract new investors to the capital market.
The CSE is currently working on adopting the Global Industry Classification Standards (GICS) to classify its listed companies. Since equity investments have become more globally focused, the importance of industry sectors has increased and countries’ borders have decreased in importance. This brings necessarily to have a common classification framework to classify companies in stock exchanges. The GICS is one such framework that the CSE is currently considering adopting in the near future.
Year or so ago we introduced the renowned brand name S&P to our indices. The introduction of the GICS will further help us to look more ‘global’. The CSE, SEC and other stakeholders are working together on a common strategic plan, which consists of all the core areas of development of the capital market to make ours a vibrant capital market in Asia.