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FINANCIAL CHRONICLE™ » EXPERT CHRONICLE™ » ‘Repatriating dividend payments, an issue for CSE’s foreign investors’

‘Repatriating dividend payments, an issue for CSE’s foreign investors’

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Manager - Equity Analytics
Manager - Equity Analytics

‘Repatriating dividend payments, an issue for CSE’s foreign investors’ Fqzgvv10
Photo Credit: K Naridasa

By Hiran H.Senewiratne

The current US dollar crisis has negatively impacted the CSE’s foreign investors. It has confronted them with difficulties in repatriating dividend payments made to them by companies, along with other financial gains, CSE chairman, Dumith Fernando said.

‘It is beyond the CSE’s control to resolve their problem. But we have already informed the Central Bank to address this issue but the CBSL has not done anything due to the dollar crisis, Fernando told a media conference held at the CSE office, World Trade Centre building in Colombo recently.

Fernando added: ‘The dollar crisis is the major reason for this and this could sometimes discourage foreign investors from investing in the stock market. However, luckily the stock market is driven by retail investors, and this could not pose a major issue for the CSE.

‘Sri Lanka suffered a Rs. 50 billion worth foreign outflow last year due to the macroeconomic uncertainty, sovereign debt default and exchange rate risks. It has seen a Rs. 2.7 billion outflow so far this year, the CSE data show.

‘Sri Lanka is committed to forging ahead with our reform agenda and with our bid to develop into a strong, stable and resilient stock market and as an attractive place to do business.

‘In terms of the stock market, CSE trades at a discount compared to most frontier markets and is supported by a promising growth potential among listed companies.

‘Over 70 per cent of the listed companies on the CSE have a debt to capital ratio of under 50 per cent and market information shows record levels of investor participation in the market and an Initial Public Offering last year was oversubscribed on the very first day.

‘The shut-down of the CSE this week would mitigate forced selling and other issues pertaining to investors, including foreign investors.’

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හා හා! දැන් තමා ඩුමිතෝ ඔයාගේ ටිකිරි English මොලේ තේරුනේ! Dividend Repatriate කරන්න, Foreign sale  වලට සල්ලි ගෙවන්න , ඩොරල් නැති නිසා නේද ඔයා  stock Market එක දවස් 5ක් වහලා තියන්නේ! IMF සල්ලි  ආවට පස්සේ අරින්න හොඳේ! එතකොට අර කියපු Tail (නැට්ට) ඉවර වෙලා තියේවි නේද?  අපරාදේ අපිටත් තේරෙන්න සිංහලෙන් කියන්න තිබ්බනේ! අවුරුදු 2ක් කෙබර ගැවද. ඔයාගේ ජොබ් එක ලංකාවට ඩොරල් FDI ගේන එකද නැත්තම්, Asia Securities profit තර කර ගන්න ඒකද? අනේ ප්ලීස් කියන්නකෝ! තව  අවුරුද්දක් CSE එකේ පිස්සු කෙලින්නේ නැතුව දැන්වත් පවු නොදී ගෙදර යන්න. #dumithGoHome

With this silly and irresponsible response of the CSE Chairman Dumith Fernando, Colombo Stock Exchange (CSE) has becomes the laughing stock market for the foreign investors and journalists. Its funny to say that by closing the market CSE is allowing free market forces to operate. Be realistic man!!! Its time you resign without causing further damage to the overall market without blatantly lying to the international community.

Tail Event to end this week and market to start next week normal! You are lying to international community including IMF, ADB and other donor agencies!! Your comments will be so damaging to the country which is currently facing its worst economic crisis.

what tail are you talking about? Tail only started to wag only last week and now you are calling it tail event will end in 5 market days! HIKZZZZ!!!! Are you a fortune teller or a henchman!

Whose Tail are you holding Mr Dumith Fernando. All investors will have their tails between their legs next week when market opens. Dumith please resign gracefully!

CFA Sri Lanka writes to SEC Chief to open stock market

The CFA Sri Lanka has in writing urged the Securities and Exchange Commission (SEC) to reopen the Colombo Stock Exchange.

The request by CFA Sri Lanka follows feedback from its members as to their views.

CFA Sri Lanka conducted an email poll on 18 April which was directed at the current active membership base of 240 members.

The following two questions were asked from them:

1. Do you think the market should be closed for the whole of this week because there does NOT exist an orderly and fair market?

· Yes

· No

· Not Sure

2. Pertaining to Question 1 do you have any comments on the matter?

CFA Sri Lanka President Dinesh Warusavitharana in his letter to SEC Chairman Viraj Dayaratne PC said 95 members responded to the survey of which 80 (84.21%) were of the view that the market should not be closed, six (6.32%) respondents were not sure, and nine (9.47%) respondents were of the view that the market should be closed. SEC was also provided with the full results of the survey.

“The comments themselves are self-explanatory and indicative of the views of investment professionals working within the capital markets in this country. One of our key advocacy objectives is to be the voice of investors who are not formally and adequately represented in the policy discourse,” CFA Sri Lanka Chief said.

“As investment professionals, we are concerned about the closure of the stock market, as it impedes the ability of the market to function efficiently – the underlying premise of any stock market. The cornerstone of the market is confidence and predictability of rules during good times and bad,” the CFA Sri Lanka letter said.

“All other markets and institutions in which our citizens store their wealth are operating normally – banks, non-banking financial institutions, life insurance companies, unit trust companies, real estate markets, etc. Many of these entities provide daily liquidity for their depositors and/or investors thus they need the stock market to operate to provide price discovery to value their assets that are traded on the CSE,” it added.

CFA Sri Lanka pointed out that the last business day that the stock market operated was Friday, 8 April which implies that 11 days have lapsed since the last day of trading. “If the market remains closed for the rest of this week and reopens on Monday, 25 April it will be 17 days since the last active market day,” it said.

“Similarly for those investors who sold on Wednesday, 6 April or thereafter they will have to wait till the market reopens for their trades to be settled, this is an inordinately long period of time,” the letter added.

CFA Sri Lanka said it welcomed a significant expansion in the CSE investor base over the past two years. More Sri Lankan households have allocated a share of their savings to equities by investing in instruments that are listed on the CSE. Some of these investors may have acute liquidity needs due to the current economic crisis so shutting their liquidity window by a market closure is detrimental to their interest.

“We urge the commissioners of the SEC to take the views of our membership into account and to reconsider the decision to keep the market closed this week,” stated the CFA Sri Lanka letter to the SEC.

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