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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » SEC in talks on attracting foreigners into stock market

SEC in talks on attracting foreigners into stock market

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Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
Sri Lanka's Securities and Exchange Commission is talking to government funds about making large share parcels available to foreign investors to boost interest in the stock market, the SEC head told Reuters.

Lack of liquidity and concerns over the time it can take to sell shares on the island nation's 2.43 trillion rupees ($18.6 billion) bourse have deterred foreign funds from buying more than a few select stocks.

Nalaka Godahewa, the head of the SEC, said the regulator is in talks with large government funds on acquiring and building up stakes large enough to attract foreign interest.

"When foreigners come, there must be parcels to buy. This is one area I am talking about to government funds," Godahewa told Reuters in an interview on Thursday.

"They (government funds) must be more strategic and build up and create these parcels when the market prices are low and hold it.

Now when the foreigners come, there is a problem in finding (adequate shares). There are no parcels to buy.”

Sri Lanka has attracted a net 22.48 billion rupees (US$ 172 million) foreign inflows into stocks so far this year after a record 33.66 billion rupees last year.

But offshore investors have been buying shares in only around 10 firms, including top conglomerate John Keells Holdings and largest lender Commercial Bank of Ceylon, out of 288 listed firms.

Sri Lanka’s Government funds include Employees Trust Fund, the largest local fund with more than 1 trillion rupees (US$ 7.65 billion) in its portfolio, Employees’ Provident Fund, funds held by State-run banks and an insurance firm.

However, they do not invest heavily in stocks, preferring lower-risk investments. Government funds traded 36.1 billion rupees (US$ 276 million) worth of stocks last year, compared to 66.5 billion rupees in 2011.

In the first 11 months of this year, they have accounted for only 17 billion rupees.

Government funds are much bigger than private local equity funds, but they invest heavily in government securities. Economists say the government uses them to hold down market interest rates by accepting low yields.

The market boomed in 2009 and 2010 with respective annual growth of 125.3% and 96% in the main stock index , largely due to new retail investors flocking into risky assets on a surge of optimism after the end of a 26-year war.

Since 2011, however, insider dealing and market manipulation has dented retail investor sentiment and the index is down 25.6% from its record high of 7,863.74 points hit on Feb. 15, 2001.

Godahewa said that the SEC has dealt with all suspected market manipulation and the regulator aims to list two new firms per month from next year.

“We’ve something like 30 initial public offerings (IPO) earmarked right now which are likely to come to the market within next two years. But you can’t allow too many IPOs coming at the same time. So we’d like to see two IPOs a month roughly next year.”

The regulator has already ordered the main listed companies to ensure that at least 20% of their shares are available to trade by the end of 2016 to raise liquidity, attract foreign funds and curb manipulation. (Reuters)
http://ceylontoday.lk/22-51382-news-detail-sec-in-talks-on-attracting-foreigners-into-stock-market.html

Leon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@Redbulls wrote:Sri Lanka's Securities and Exchange Commission is talking to government funds about making large share parcels available to foreign investors to boost interest in the stock market, the SEC head told Reuters.

Lack of liquidity and concerns over the time it can take to sell shares on the island nation's 2.43 trillion rupees ($18.6 billion) bourse have deterred foreign funds from buying more than a few select stocks.

Nalaka Godahewa, the head of the SEC, said the regulator is in talks with large government funds on acquiring and building up stakes large enough to attract foreign interest.

"When foreigners come, there must be parcels to buy. This is one area I am talking about to government funds," Godahewa told Reuters in an interview on Thursday.

"They (government funds) must be more strategic and build up and create these parcels when the market prices are low and hold it.

Now when the foreigners come, there is a problem in finding (adequate shares). There are no parcels to buy.”

Sri Lanka has attracted a net 22.48 billion rupees (US$ 172 million) foreign inflows into stocks so far this year after a record 33.66 billion rupees last year.

But offshore investors have been buying shares in only around 10 firms, including top conglomerate John Keells Holdings and largest lender Commercial Bank of Ceylon, out of 288 listed firms.

Sri Lanka’s Government funds include Employees Trust Fund, the largest local fund with more than 1 trillion rupees (US$ 7.65 billion) in its portfolio, Employees’ Provident Fund, funds held by State-run banks and an insurance firm.

However, they do not invest heavily in stocks, preferring lower-risk investments. Government funds traded 36.1 billion rupees (US$ 276 million) worth of stocks last year, compared to 66.5 billion rupees in 2011.

In the first 11 months of this year, they have accounted for only 17 billion rupees.

Government funds are much bigger than private local equity funds, but they invest heavily in government securities. Economists say the government uses them to hold down market interest rates by accepting low yields.

The market boomed in 2009 and 2010 with respective annual growth of 125.3% and 96% in the main stock index , largely due to new retail investors flocking into risky assets on a surge of optimism after the end of a 26-year war.

Since 2011, however, insider dealing and market manipulation has dented retail investor sentiment and the index is down 25.6% from its record high of 7,863.74 points hit on Feb. 15, 2001.

Godahewa said that the SEC has dealt with all suspected market manipulation and the regulator aims to list two new firms per month from next year.

“We’ve something like 30 initial public offerings (IPO) earmarked right now which are likely to come to the market within next two years. But you can’t allow too many IPOs coming at the same time. So we’d like to see two IPOs a month roughly next year.”

The regulator has already ordered the main listed companies to ensure that at least 20% of their shares are available to trade by the end of 2016 to raise liquidity, attract foreign funds and curb manipulation. (Reuters)
http://ceylontoday.lk/22-51382-news-detail-sec-in-talks-on-attracting-foreigners-into-stock-market.html

Wow, This year it was debenture got the attention of the investors next year it will be IPO's.
And also like Mr.Godahewa says not only state funds there are private funds as well. Like insurance, Banking. If it makes mandatory for them to invest some portion of their fund in the stock market what would be the outcome??

D.G.Dayaratne


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
I think SEC is trying to misuse public funds again

All decisions of public funds should be taken for the benefit of employees who contributed for funds

I agree this is a good time to buy. Public funds  should be able to  take  Independent decisions according to guidelines. to achieve main objective of them. Central bank should interfere only they deviate from general guidelines

 To my mind Use of public funds to attract foreign buyers is also manipulation of   stock
market.There may be hidden objective behind this attempt of SEC
to make personal gains

 For Good stock market we need large number of independent buyers and sellers who make
independent decisions to maximize profits to achieve their own objectives

I again say this a good time buy

Public funds should invest in stock market to achieve their objectives

SEC main role is to create level playing field in the stock market

So far SEC has not understood its role



Last edited by D.G.Dayaratne on Sun Dec 29, 2013 12:37 pm; edited 1 time in total (Reason for editing : to explain more)

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
@D.G.Dayaratne wrote:There may be hidden objective behind this attempt of SEC
to make personal gains
Not only at SEC but also in all the govt sector.

K.Haputantri

K.Haputantri
Co-Admin
@D.G.Dayaratne wrote:SEC main role is to create level playing field in the stock market

So far SEC has not understood its role
Not only the SEC, the entire Govt., (including the appointing authority of SEC) have not understood their role.

hettihewa


Senior Equity Analytic
Senior Equity Analytic
Hello Haputantri all the best for the new year. Just for my curiosity , have you ever applied for a job at SEC and coudnt get in ? Because I have noticed again and again you are so quick to critisise SEC when ever some SEC related article is uploaded in the forum. As if you have some personal grudge against SEC. It doesnt look like an impartial openion as it is 100% biased all the time. Is it possible that SEC never does anything good with all the experience and knowledge available to them. Hmmm thats even against the theory of probability. Everyting SEC does is bad or weak according to you and you seem to know it all. Must be quite clever I must say.







D.G.Dayaratne


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
some people think criticism is always based on personal grudge

It shows their level thinking and Intelligence

What to do



Last edited by D.G.Dayaratne on Thu Jan 02, 2014 7:37 am; edited 1 time in total (Reason for editing : typing error)

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