Lack of clear political direction stalls new foreign cash flow to CSE

Lack of clarity and direction in Sri Lanka's political front has deterred fresh foreign funds from coming into the Colombo Stock Exchange (CSE), stock analysts say.

"Earlier (pre-January 9) despite peace being there, the international community wasn't 'totally' inclusive and there were only certain sections of the international community (i.e. China, India) that were assumed to be largely included," an analyst told the Business Times.

According to him, those (countries) that weren't given much prominence earlier are now eyeing the CSE. "The window of opportunity that was half shut then is now fully open, but they are adopting a wait - and - see attitude resulting from the political situation."

A CEO of a large broking firm said that when they had a roadshow recently in Singapore, France and the US, a collection of fund managers, bankers and high networth clients were extremely interested in investing in the CSE.

"About 30 of them came to the country and made preliminary inquiries."

Another analyst said that what some potential clients ask is whether Sri Lanka has 'adequate laws' to counter securities fraud and what kind of transparency there is. This is a frequent question by clients in the US. And we can't explain (most times) all that's going on here."

Investor confidence can be described as the foundation on which the capital market is built, and sound governance will be able to contribute towards attracting both local and foreign investors and stimulate economic growth, the Securities and Exchange (SC) says in its annual report. "As the capital market regulator, the SEC strives to promote good corporate governance practices through a framework of rules and regulations which ensure accountability, fairness, and transparency," SEC Chairman Thilak Karunaratne has said in his statement.