Market capitalization crosses Rs 1,000 billion

CSE creates history

Charumini de Silva

The market capitalization of the Colombo Stock Exchange (CSE) crossed the Rs. 1 trillion (Rs. 1,000 billion) level creating history in the CSE yesterday. With this outstanding performance, the CSE achieved a top position among the world stock markets while becoming the first in Asia.

Channa de Silva

Securities and Exchange Commission (SEC), Director General, Channa de Silva told Daily News Business that this was a historic moment as all CSE records had been broken while becoming one of the best performing stock markets in the world with a total value exceeding Rs. 1,000 billion. With the end of the war the confidence level of the business community has grown and as a result the CSE attracted more investors to the market.

He said with the current developments in the CSE, valuations have been raised immensely.

The Price Earning Ratio (PER) which earlier remained at six to seven percent with very low valuations has increased up to 14 percent. The listed companies which recently issued shares will also commence trading next week on a better platform on a high note. The SEC would amend certain rules and regulations to ease access of the CSE. Therefore, there will be new streams to attract more local and foreign investors.

The SEC will have its first road show next month. The November road show will focus mainly on Singaporean investors and the SEC has plans to conduct more road shows with the improvements in the CSE, he said. The CSE has shown its potential for higher growth and the SEC expects more participation of foreign buyers by January.

Local investor participation is 100 percent in the CSE with the dawn of peace as the confidence level has increased with a strong potential.

The contribution of the rural community is commendable while there are many requests for stock market branches in remote areas, he said.

Stockbrokers Association Chairman, Sriyan Gurusinghe said, “We were anticipating this performance by December 2009, but the investors were so confident that we made a landmark even before the predicted time frame. With inflation and interest rates dropping investments have increased rapidly and we hope that this positive trend will continue in the future too.”

He said there is a need to encourage more companies to get listed on the CSE to raise capital for their ventures and expand business.

The time has come to expand the economy and with the current economic development projects the entire economy will improve rapidly. Local and foreign participation in the market is equally important. Local investors kept the market active with peace being established in the country.

There were many inquiries from foreign investors too and that is important for a country to be exposed in the international market to attract more investors, he said.

With more companies getting listed on the CSE the companies could raise capital easily for their new projects while including more economic activities, which will eventually help the country to enhance its economic activities, Gurusinghe said.

Federation of Chamber of Commerce Industries of Sri Lanka (FCCISL) President, Kosala Wickramanayake said the performance of the CSE was a good indication that the market will grow further.

The present business community has shown confidence in moving forward positively.

He said with the eradication of terrorism Sri Lanka has performed well competing with the world stock markets while creating history and the FCCISL is confident that the CSE will be the top stock market soon. The agriculture and tourism sectors will show significant growth with the opening of the North and the East.