The Securities and Exchange Commission (SEC) is exploring possibilities of bringing in a minimum free float requirement. ''The rules have been drafted, we are currently obtaining stakeholders’ comments on the new set of rules and we expect these minimum free float rules to be brought in, in the next six months”, said Krishan Balendra, Chairman, Colombo Stock Exchange.
Speaking at the Invest Sri Lanka, Investor Forum in Hong Kong yesterday he said that they have introduced the S&P Index. “Previously we had two local indices, the S&P Sri Lanka 20 Index is a blue chip index with 20 of the largest and most liquid stocks, and it provides foreign investors with a globally recognized index.
“Market cap is low, 19 billion dollars, but it is also low relative to the economy, just 30% of GDP, significantly lower than other markets in the region,” he said. Activity in the stock exchange has increased significantly in the last few years.
“In 2012, of the foreign participation, almost 65% came from funds investing in the market for the first time. So we continue to attract new foreign funds into the market.”
Ajith Nivard Cabraal Governor Central Bank speaking at the event said that today Sri Lanka is a reasonably stable economy with a value of US$ 16 billion.
“Our rupee has been generally stable, even in the phase of intense volatility in the past few weeks.
One of the most stable currencies has been the rupee. Of course it had to have a slight adjustment due to the fact that there were many trading partners of Sri Lanka which have had major changes in their currencies.” “Sri Lanka is a safe place to invest, it has the constitutional guarantees for the investment, the companies are doing better and better and they are being managed better, as a result of which we believe that they would be in a position to earn your trust as well as ensure that your confidence is not misplaced.”
“Sri Lanka is open for business, it is an attractive destination. It has all the features that people would like to use to have good and safe living conditions.
At the same time, the time to invest is now because Sri Lanka is still undervalued and you will have good values as far as your investments are concerned, which over time, would get saturated.” Dr. Nalaka Godahewa, Chairman, SEC said that during the last couple of years, the interest of global fund managers has started shifting towards emerging and frontier markets.
“Of course, recently, there have been certain changes that are happening, but these are ups and downs. We have to make use of these opportunities. One of the problems that Sri Lanka is facing currently is that we're not yet known in the world so that is why we want to make use of opportunities like this - to come and tell you that story.”
“There are so many large companies not yet listed that are currently considering entering the market. In this market, what we saw in the last two years, a very interesting phenomenon after the war, particularly, a lot of foreign investors have started seeing opportunities. In 2010, foreign participation in the market was only about 10 percent.”
“It has grown by now to about 40 percent which is a good sign and shows that foreign funds are seeing the potential in the market. The PE ratios are quite attractive, as you can see, and even though there have been fluctuations, the market has been growing. During the last 12 months it has given an 18 percent return to investors.”