Conflicting emotions over the outcome were expected since there was much heat generated before the meeting by various parties including the regulator.
President Mahinda Rajapaksa chairs the meeting with capital market stakeholders along with Government officials yesterday at Temple Trees – Pic by Sudath Silva
The majority of the brokers and the select investors present said they were “extremely satisfied” with the discussions as contentious issues such as overregulation, alleged malpractices, credit rules for brokers and other challenges facing capital market were thrashed out.
The Securities and Exchange Commission (SEC) and the Colombo Stock Exchange (CSE) as expected came under flak, though heads of both institutions Tilak Karunaratne and Krishan Balendra respectively defended their positions.
The President had emphasised that the meeting was not an intervention but a discussion as capital markets come under the purview of the Finance Minster, a portfolio which he holds as well.
The emphatic message from the President was that the stock market was important, hence it must be revived and expanded so as many people can benefit by investing in tandem with improved economic prospects for the country.
Having described the meeting as a pre-2013 Budget discussion, Finance Ministry Secretary Dr. P.B. Jayasundera said concerns expressed with regard to overregulation must be taken note of in addition to recognising the need for more retailers, especially in rural areas including cash-rich farmers, to participate in the market. In that context, he said the need of the hour was a collective effort by all stakeholders.
High net worth investor Dilith Jayaweera via a PowerPoint presentation made a strong case that the market was overregulated, often with ad-hoc measures, and unnecessarily maligned, thereby instilling fear among retail investors – all of which had caused the serious downfall of the market. Chief Karunaratne defended SEC action saying regulations were important to safeguard investor interest, bring stability and punish manipulators. Brokers were quick to shoot that argument down, saying numbers have reduced as investors being driven away and even the few remaining would disappear if the situation persisted.
Others who briefly spoke for SEC were good governance and minority shareholder activist K.C. Vignarajah and former business leader Chari De Silva, who also served as SEC Chief for a brief period, as well as Jafferjee Stockbrokers CEO Murtaza Jafferjee.
The Colombo Stock Brokers Association President Siyan Gurusinghe also spoke, in addition to several others.
Deputy Finance Minister Geethanjana Gunawardena, Secretary to the President Lalith Weeratunga, Advisor to President MP Sajin Vas Gunawardena and Sri Lanka Tourism Development Authority Chairman Dr. Nalaka Godahewa and Treasury representatives were among other officials present. Investors included Harry Jayawardena and Nimal Perera. CEOs of around 27 broking firms were present along with the Commissioners of the SEC and Board members of the CSE.
Following the discussions, the President directed the Treasury Secretary to convene another meeting to be chaired by Dr. Jayasundera to follow up with issues raised, steps needed to resolve same and revive the stock market.
Year-to-date over Rs. 300 billion in value has been wiped off the market, whilst in terms of returns it is 20% negative on top of an 8.5% dip in 2011.