‘Invest Sri Lanka’ restarts in Dubai
The ‘Invest Sri Lanka’ Investor Forum organized by the Securities and Exchange Commission of Sri Lanka (SEC), Colombo Stock Exchange (CSE), in association with the Embassy of Sri Lanka in UAE and the Consulate General of Sri Lanka to Dubai and Northern Emirates was recently held at the Sheraton Grand Hotel Dubai. The forum made a strong case for investment flows into Sri Lanka. The event drew a strong turnout and a full house of leading Dubai–based Sri Lankans across multiple industries and was graced by Ajith Nivard Cabraal as the keynote speaker.
A Sri Lankan delegation including senior representatives of the SEC, CSE, the Central Bank of Sri Lanka, and representatives of Stock Broker Firms collectively pitched for further investment flows into Sri Lanka, a call that was also boosted by strong endorsements for Sri Lanka by the representatives of the Embassy of Sri Lanka in UAE and the Consulate General of Sri Lanka to Dubai and Northern Emirates.
Delivering the welcome address, Malraj de Silva, High Commissioner of Sri Lanka, Embassy of UAE stated that he was very happy with the enthusiasm shown by the Sri Lankan community in the UAE in participating in the forum and invited the participants to reap the benefits of investing in the CSE.
Ajith Nivard Cabraal, Governor of the Central Bank of Sri Lanka making the keynote address at the event invited the diaspora community to be a part of the growth story of Sri Lanka and said “The first step that we took after I assumed office and as a central bank team was to ensure that we give clarity. So we set out a roadmap for the next six months, so that investors would know where is the economy going to move? What would the rupee do? Where would the interest rates be? What would be the situation with regard to the debt repayments? What would be the way in which the country would handle its balance of payments?”
He further added “So those questions needed to be answered. Those are the tough questions. Unless those questions are answered, the rest of the questions would not be relevant. That is why we have taken painstaking steps to individually answer those questions and give confidence. Now that the overall stability of the economy is being maintained, we also need to ensure that there is stability within the community.” The Governor went on to emphasize on commitments made by the Sri Lankan government in terms of interest rates “What we mentioned was that companies were doing well, how did that happen? If there was turmoil, would that have happened? Interest rates were at very low levels. So the advantage that all those companies received as a result of the interest rate differential was enormous. The ability to do business was, again, a very important factor that allowed them to make profits. And to have a decent bottom line, the reduction of taxes was the stimuli that the government provided. If you remember, since 2015, we had sluggish growth, so much so that by 2019, growth had come down in the country to around 2.3%. So what should the government have done? The government had to give a stimulus. And that stimulus, whatever anyone may say, has worked. That is why the economy was safeguarded.
‘’Even during the COVID, if we had another additional 20% 30%, more to be paid as taxes, many of these companies would have been struggling. If there were higher interest rates to have been paid, many of these companies would have been struggling, you wouldn’t have been having that same momentum. And if that momentum was not there, that wouldn’t have got translated into a good feeling. And if you don’t have a good feeling, you won’t have people coming and investing.”
“If Sri Lanka acts in line with its potential, we have an extraordinary growth story to tell for the future. And that growth story will come from you, from the investors, from the companies which are being listed and from the companies that are in operation in Sri Lanka”
“The time is now, for you to take up positions, we still have a lot of potential for the stock exchange to grow. I remember in 2014, if you look at the market capitalization, in dollars, it was about 25 billion after seven years, even notwithstanding the growth in numbers that was mentioned by the Chairman of the Securities and Exchange Commission as well as by the Chairman of the Colombo Stock Exchange, the market capitalization is still lower in dollar terms, as far as all the companies are concerned. If you work it out today, it will be less than $25 billion. So what does it say? It says that there is latent potential, and latent strength within the Sri Lankan market, the Sri Lankan equities that we haven’t still been able to realize”
Viraj Dayaratne PC, Chairman of theSEC speaking at the event explained how it is customary for the Colombo Stock Exchange, and the regulator the Securities and Exchange Commission to have events of this nature to invite investors to Sri Lanka’s stock market, from different parts of the world. But due to the pandemic, this exercise was prevented for over two years.
He further stated the role of the SEC “As the regulator of the stock market, the Securities and Exchange Commission has a dual role to play, we have to regulate the market and at the same time, ensure that we take steps to develop it. So, in managing these two, these twin interests or duties, if I may call it we have to strike a balance because whilst regulation is important to ensure the protection of investors and the integrity of the market, it is also necessary to ensure that we do not over regulate so that all market participants have the freedom and the space to engage in their activities.”
“The number of trades that take place has increased tremendously. And as a result, it is necessary for us to ensure the integrity of the market and ensure that no wrong doing is taking place. So in order to do that we have enhanced our surveillance functions and the supervisory function. We have real time surveillance on a daily basis with regard to the trades that are taking place. Our Corporate Affairs division supervises and looks into the affairs of listed companies, then market intermediaries are supervised by our Supervision division. So, that will ensure that market integrity is maintained at all times and that all investor interests will be looked after.”
He added, “One other significant achievement, was the enactment of the new Securities and Exchange Commission Act that was on the cards for several years. The new law was brought in and I must tell you, that not only does it help better regulation, but it provides a lot of opportunities for the development of the market, it will be possible for us to introduce new products, then it will be possible to facilitate the setting up of new funds. And that means creating more opportunities for you to invest.”
CSE expected to maintain growth momentum in the wake of brighter IMF bailout hopes
By Hiran H.Senewiratne
The CSE will be able to maintain its growth momentum with IMF bailout prospects brightening this week. Consequently, foreign inflows to the CSE will improve in the future, Head-Market Development, CSE, Niroshan Wijesundara said.
“To date the CSE has been able to register a 14 per cent growth and with the IMF bailout approval we could expect more foreign inflows into the market, Wijesundera told the Island Financial Review.
Amidst these developments the market ended on a positive note at the end of yesterday. Initially there were mild profit- takings but this did not negatively impact the overall performance of the market.
Accordingly, shares edged up in mid-day trade yesterday while investors adopted a wait- and -see approach as the country looked forward to IMF approval on the Extended Fund Facility towards the end of this week.
“Investors are on a wait- and- see approach as the IMF is likely to approve the US$ 2.9 billion dollar loan, market analysts said.
“Selling pressures have eased and now buying sentiments are improving, analysts said.
The ASPI went up by 29.54 points, while the most liquid S&P SL20 index rose by 15.7 points. Turnover stood at Rs 1.8 billion with three crossings. Those crossings were reported in Hemas Holdings, which crossed three million shares to the tune of Rs 199 million, its shares were quoted at Rs 65, Hayleys 738,000 shares crossed for Rs 59.8 million, its shares traded at Rs 31 and JKH 290,000 shares crossed for Rs 42 million, and its shares fetched Rs 141.
In the retail market top seven companies that mainly contributed to the turnover were; Browns Investments Rs 209 million (30.8 million shares traded), JKH Rs 84.6 million (584,000 shares traded), Access Engineering Rs 79.5 million (4.9 million shares traded), LOLC Finance Rs 75.4 million (10.9 million shares traded), Union Bank Rs 62.9 million (6.7 million shares traded), Expolanka Holdings Rs 60 million (420,000 shares traded) and SLT Rs 57.5 million (687,000 shares traded). During the day 98.7 million share volumes changed hands in 20000 transactions.
Top gainers during mid- hours were Commercial Bank, Browns Investment and Access Engineering. Access Engineering is an unusual top contributor and this is because interest had been generated in it after assurances had been given on the IMF deal and there is an assumption that multilateral projects are likely to begin with the IMF restructuring process coming to a close, market analysts said.
Sri Lanka’s growth will be contained at a negative 3 per cent in 2023 after a 12.4 per cent shrinkage in the fourth quarter of 2022 and is expected to turn positive from next year, State Minister of Finance Ranjith Siyambalapitiya said. Siyambalapitiya told reporters on March 18 that Sri Lanka can expect a “positive economy” in 2024.
Yesterday the rupee opened stronger and was quoted at around Rs 330/338 to the US dollar, stronger from Friday’s close of Rs 337/345 to the US dollar, dealers said.
“Surfing Through the Crisis”
EY Sri Lanka, is scheduled to host a discussion ‘Debt Restructuring Implications to the Financial Services Sector’, on March 22, from 08:45 am to 12:30 pm at The Kingsbury Colombo. The session branching under the theme, ‘Surfing through the Crisis’, is designed specifically for CEOs, CFOs, and CRO of the financial sector, as well as the chairpersons of the Audit Committee and the Board Integrated Risk Management Committee. The event hopes to create value for Sri Lanka’s financial sector amidst the prevailing economic challenges. As the largest service providers to the financial sector in terms of audits, tax, consultancy, and strategy & transaction, EY Sri Lanka feels compelled to assist the financial sector as they navigate the challenges of the economic crisis.
Despite the expected positive outcomes of debt restructuring, the process itself can be painful for the country, financial institutions, debtors and creditors. To the financial services sector specifically it could bring several challenges to capital management, financial reporting, Credit Risk and Liquidity Risk management strategies.
This session will explore these implications, under two technical segments, from Risk Management and Accounting lenses, and the mechanisms required for an effective transition. From a Risk Management perspective there will be several simulations on how it affects the financial institution’s capital and profitability whilst the accounting perspective will include discussions relating to how the debt restructuring process shall be accounted for in line with SLFRS 9 Financial Instruments.
The event will be conducted by Manil Jayesinghe, Country Managing Partner of EY Sri Lanka and Maldives, and Rajith Perera, Partner Financial Accounting Advisory Services EY Sri Lanka. To register for the session, or for further inquiries please contact Nurani Rajapaksha (Nurani.Rajapaksha@lk.ey.com)
Participants of Raid Amazones 2023 arrive from Paris on SriLankan Airlines
The participants of the adventure trail ‘Raid Amazones 2023’ arrived at Bandaranaike International Airport on SriLankan Airlines’ flight UL 564 from Paris. SriLankan Airlines is the Presenting Partner of Raid Amazones and extended a warm welcome with a traditional flare to the arriving group.
The group boarded the Udarata Menike train from the Gampaha Railway Station shortly thereafter for a scenic journey to Kandy, where the trail will unfold from 22 – 28 March.
Raid Amazones is the world’s only itinerant women’s adventure race. Nearly 250 female athletes will be participating in the 21st edition of the trail in Kandy.
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