Capital market gathers momentum – SEC

* Rs. 97 b net foreign inflow and Rs. 160 b worth of capital raised during the past three years
* Market capitalisation as a percentage of GDP up from 11.1% to 36% since end of the war

The Securities and Exchange Commission (SEC) is maintaining that the capital market has gathered strong momentum during the past three years and post-war reflecting sustained recovery proving those who once predicted doom and gloom wrong.

The SEC said that thanks to a series of initiatives with the support of all stakeholders, the capital market has reported significant achievements.
A significant development is the net foreign inflow of Rs. 97 billion during the past three years. This achievement is commendable since there were many who warned that foreigners would shun the Colombo Stock Market after it was faced with allegations of manipulation among other ills. During the past three years companies have also raised a staggering Rs. 160 billion in capital reinforcing the attractiveness of of the Colombo Bourse.

Some of the other key achievements post-war of the Colombo Stock Market according to the SEC includes: The main Price Index ASPI has gone up by 278%, Market Capitalisation has appreciated by 631%, the average daily turnover has gone up by 205%, market capitalization as a % of GDP has appreciated from 11.1% to 36%, assets under management in Unit Trusts (Mutual Funds) has increased by 1,708% and the total turnover of the corporate debt market has appreciated by 6,036%.

“Economic growth hinges on an efficient capital market which mobilises savings for productive investments. From the perspective of Sri Lanka’s fast emerging economy status, the role played by the capital market as an integral driver of the overall macro economy is constantly evolving,” the SEC said.
To this effect the SEC said it believes, while regulation is fundamental to ensure the capital market mechanism is fair and transparent, it has to facilitate market development.

“The Sri Lankan Capital Market is one of the key areas which witnessed impressive growth in the post-war period and it is in view of this that the SEC, in consultation with key industry participants, put forward a three-year Capital Market Development Road Map in October 2012 to reposition the market to play an important role in the capital formation and development of the economy,” SEC said.

Apart from the road map, in order to develop the capital market the SEC, together with the CSE, implemented several important initiatives in the recent past. These initiatives were implemented in order to increase liquidity and strengthen regulatory framework.

The SEC said the execution of the road map has progressed steadily over the years and most of the initiatives have reached substantial completion. The broad objectives of the road map are both structural and functional in nature covering many areas such as Regulation, Investor Protection, Market Development, Infrastructure Development and Enhancement of Financial Literacy, Risk Management etc.

“Implementation of these initiatives together with the Capital Market Development Road Map has undoubtedly contributed towards fostering a fair, robust and efficient market to support and complement Sri Lanka’s economic development program. It is heartening to note that during the post-war era the market has grown steadily,” the SEC said.

http://www.ft.lk/2014/12/22/capital-market-gathers-momentum-sec/