Foreign investment in CSE - Due to?

One positive factor in CSE is growing foreign investment. It is said that during 2012, upto now net inflow is Rs.28.42Bn. and growing.

I like to get your honest opinion. Is it due to:

1. Investment flowing in due to excellent governance of the country and all its regulatory apparatus, instilling good investor confidence resulting in drawing in foreign funds

OR

Is it due to:

1. Rupee depreciation upto 16% during 2012, making shares cheaper for foreigners

2. Interest income yield in US or western countries are next to nothing, giving very marginal income on any investment securities

3. European regional crisis, making guilt edged security investment the riskiest

4. Except for governance issues, SL has a good potential for sustainable growth

5. Share prices are at rock bottom, giving excellent opportunity for value investors with medium term to long term investment in mind.

6. Potential for SL to become exporters of high-tech and value added product exporters from the position of that of commodity exporters, and;

7. Volatile conditions prevailing in regional markets such as India and Bangladesh, indicating CSE as a marginally better location right at the moment.

It is like a fruitsalad. They consider all factors. Not only a single factor.

This is my unbiased statement.

Good governance is yet to be introduced to our country before reaching to excellent stage.

Answering to the second part-
More weight given for item 1,2 & 5.

worthiness wrote:This is my unbiased statement.

Good governance is yet to be introduced to our country before reaching to excellent stage.

Answering to the second part-
More weight given for item 1,2 & 5.

In such case, rather than the internal strengths within SL, external weaknesses prevalent within and outside SL creates the inflows. May be inflows will be much higher if the governance is desirable....

If we need to further attract FI & FDI, predictable policy ( more like non wavering policy). better governance, visibity and easiness to do business needs to be improved. We still have to improve on complicated and delayed paper work and regulation.

Why are we getting Forigen Investments?

I think it is mainly due to 1,2,4,5.

anu wrote:One positive factor in CSE is growing foreign investment. It is said that during 2012, upto now net inflow is Rs.28.42Bn. and growing.

I like to get your honest opinion. Is it due to:

1. Investment flowing in due to excellent governance of the country and all its regulatory apparatus, instilling good investor confidence resulting in drawing in foreign funds

OR

Is it due to:

1. Rupee depreciation upto 16% during 2012, making shares cheaper for foreigners

2. Interest income yield in US or western countries are next to nothing, giving very marginal income on any investment securities

3. European regional crisis, making guilt edged security investment the riskiest

4. Except for governance issues, SL has a good potential for sustainable growth

5. Share prices are at rock bottom, giving excellent opportunity for value investors with medium term to long term investment in mind.

6. Potential for SL to become exporters of high-tech and value added product exporters from the position of that of commodity exporters, and;

7. Volatile conditions prevailing in regional markets such as India and Bangladesh, indicating CSE as a marginally better location right at the moment.

BTW, Rs 28 billion is about US$210 million. In $ amount this is peanuts if we can attract bigger and more funds and investors. I know personally that many foreigner are still worried to investo due to changing policy issues.

The recent NRFC case was one but atleast CB immediately took steps to clarify and assure they there is no restriction at all to withdraw fron NRFC accounts.

What they pulled back in 2009 and 2010 with massive profit, now reinvesting in the same stocks at rock bottom.
Capital gain as well as currency depreciation helping to acquire more quantity.

slstock, good inputs. Thanks. I also feel that predictability of legal and regulatory system, more flexible and symplified procedure and equitable governance where no one is above law can bring in a billion dollar easily, rather than this paltry $209Mn, which we keep trumpeting all along.

Redbulls wrote:What they pulled back in 2009 and 2010 with massive profit, now reinvesting in the same stocks at rock bottom.
Capital gain as well as currency depreciation helping to acquire more quantity.

Well said. Very true.

1. Rupee depreciation upto 16% during 2012, making shares cheaper for foreigners
5. Share prices are at rock bottom, giving excellent opportunity for value investors with medium term to long term investment in mind.
7. Volatile conditions prevailing in regional markets such as India and Bangladesh, indicating CSE as a marginally better location right at the moment. ( China and India hype as great investment places are dying down a bit)

Rajitha wrote:1. Rupee depreciation upto 16% during 2012, making shares cheaper for foreigners
5. Share prices are at rock bottom, giving excellent opportunity for value investors with medium term to long term investment in mind.
7. Volatile conditions prevailing in regional markets such as India and Bangladesh, indicating CSE as a marginally better location right at the moment. ( China and India hype as great investment places are dying down a bit)

Hey Rajitha glad to see you after sometimes..! Keep posting. GL

anu wrote:5. Share prices are at rock bottom, giving excellent opportunity for value investors with medium term to long term investment in mind.

Considering the CSE's PE Ratio of 10.61 and the country's expected GDP growth rate of 6.6%, Sri Lankan equities offer better potential returns than most other investment avenues.

Good to see some people recognizing that there are opportunities and potential without being overly negative.

A gradual collective sentiment change can make a difference. In addition am not sure whetehr the whole foreign inflow is totally foregin but am sure majority is.

Also certain companies started getting listed in Forbes Asia list and the SP index can also do some good. So certain companies can attract more foriegn funding if they can improve their position, their share liquidity and the ratings.

Certain companies revenue has grown by about 500% year to year. Once they start consolidating and reducing expenses and makign bigger profits they can start worrying about share liquidity and getter dividends.

slstock wrote:In addition am not sure whetehr the whole foreign inflow is totally foregin

Yeah slstock, I also have the same doubt.

CHASE wrote:

slstock wrote:In addition am not sure whetehr the whole foreign inflow is totally foregin

Yeah slstock, I also have the same doubt.

Why the doubt?
According to SLBFE statistics, over 1.7 million Sri Lankans are currently employed overseas. It is a definite fact that some part of the 'foreign inflow' is from these migrants. Despite the fact that they can invest in other markets, they choose to invest a part of their savings at home - not only out of loyalty, but also due to better potential returns.

There also can be another option Antonym. Anyway the idea is that bulk of these $ should stay in the country for a while and it is not for short/medium term trading.

But as I mentioned i think the bulk is genuine longer term investments.

Antonym wrote:

CHASE wrote:

slstock wrote:In addition am not sure whetehr the whole foreign inflow is totally foregin

Yeah slstock, I also have the same doubt.

Why the doubt?
According to SLBFE statistics, over 1.7 million Sri Lankans are currently employed overseas. It is a definite fact that some part of the 'foreign inflow' is from these migrants. Despite the fact that they can invest in other markets, they choose to invest a part of their savings at home - not only out of loyalty, but also due to better potential returns.

Antonym wrote:

CHASE wrote:

slstock wrote:In addition am not sure whetehr the whole foreign inflow is totally foregin

Yeah slstock, I also have the same doubt.

Why the doubt?
According to SLBFE statistics, over 1.7 million Sri Lankans are currently employed overseas. It is a definite fact that some part of the 'foreign inflow' is from these migrants. Despite the fact that they can invest in other markets, they choose to invest a part of their savings at home - not only out of loyalty, but also due to better potential returns.

Another point to be noted on foreign inflow is 10% commission, bribes went out as a black money and coming in as a FDI.

Antonym wrote:

CHASE wrote:

slstock wrote:In addition am not sure whetehr the whole foreign inflow is totally foregin

Yeah slstock, I also have the same doubt.

Why the doubt?
According to SLBFE statistics, over 1.7 million Sri Lankans are currently employed overseas. It is a definite fact that some part of the 'foreign inflow' is from these migrants. Despite the fact that they can invest in other markets, they choose to invest a part of their savings at home - not only out of loyalty, but also due to better potential returns.

I'm talking about HNWI..... main reason to have the doubt is even shares come to rock bottom in June we couldn't see much interest from big guys & I don't think they are that stupid to lose the opportunity. Below are few other reasons
* Some Big people will do anything to fool/mislead small investors & they will try new ways.This
way they can easily collect more shares without highlighting.
* Even with the recent sec issues we didn't see it's losing foreign interest.
* They will have an advantage in investing in USD if it went up further.
I can't say exactly it's happening like that. I will PM you some more details. since I don't know exactly, i don't like to write those in public.

most of the people who working overseas are registered as local inverter. (Like me & everyone I know ) may be few might registered as foreigners But I don't think their capacity is high.

slstock wrote: In addition am not sure whetehr the whole foreign inflow is totally foregin but am sure majority is.

Anyone can incorporate a company with an expenditure of around USD5,000 in British Virgin Islands (BVI), Caymen Islands etc. These are tax havens.

Having a BVI registered company, with a registered address in Hongkong and doing investments in other countries are easy ways of hiding black money. GREG's major shareholder is a BVI company. Gold Coin - the controversial pyramid scheme company which Central Bank investigated was a BVI company....!