After two years of heavy flight of cash, the Colombo Bourse saw net inflow of Rs. 39 billion or over $ 300 million last year. CSE Chairman Krishan Balendra revealed at the Invest Sri Lanka forum in Mumbai yesterday that 65% of the net inflow was from first-time investors to emphasise the growing attractiveness of the valuations of companies listed on the Colombo Bourse.
“Several new funds have registered and been active last year and this trend is continuing in 2013 as well, though there has been a slight outflow year-to-date due to a big fund taking positions,” Balendra told the forum attended by over 150 representatives from managers of offshore funds in Mumbai and India-based funds.
Balendra also said the CSE was trading at low P/E compared to most regional peers whilst the market had an earnings growth forecast of 37% over the next two years. “Most growth sectors in the market are trading at deep discounts and this provides attractive investment opportunities,” he said.
The CSE Chief also said low market capitalisation to GDP at CSE compared to most regional peers and the low-debt-to-equity ratio compared with other markets around the world were among other factors which investors needed to consider.
It was also pointed out that CSE indices had little correlation to global indices, hence Sri Lanka’s equity market though small was a good diversification opportunity for Indian investors and fund managers.
Balendra also highlighted opportunities in the unit trust industry with Budget 2013 allowing direct foreign investments and said measures to improve liquidity and listings were progressing.
CSE Director Vajira Kulatunga spoke on the vast opportunities in Government debt market for investors who are focusing on low risk but attractive returns. “The big bang in Government debt market will happen this year as the Central Bank is working to implement a transparent government securities trading platform,” he said in his presentation, which also focused on the corporate debt market.