The Colombo Stock Exchange (CSE) anticipates a brighter market this year with more listings and a higher market capitalisation to make a positive impact on the economy, CSE Chairman Dumith Fernando told the media last week on CSE’s performance last year and plans for this year.
The CSE notched a stellar performance in equities in 2021with the All Share Price Index and the S&P SL 20 Indices crossing 80 and 60 percent growth during the year.
“We are confident of a better year with a host of new products and measures taken to boost the market , Fernando said, adding that the Exchange performed well last year despite a challenging year,” Fernando said.
Harmonising rules, digitalisation, promotion and marketing to encourage more retail and corporate investors, measures for order matching, strengthening the multi-currency board and demutualisation process of the Exchange are some of the major plans of the Stock Exchange this year.
The number of Initial Public Offerings (IPOs) launched last year and the fact that almost all were oversubscribed on the very first day is an indication of the confidence in the corporate sector and the credibility of the Stock Exchange, Fernando said.
The Hela Apparel Holdings Limited’s IPO was the latest, to be oversubscribed on the same day last week and the second for the year.
The CSE saw unprecedented investor interest in 2021 and it hopes to see more interest among retail and corporate investors this year in line with its target of around 20 listings for the year.
The Exchange recorded a 36 percent market turnover in 2021 and anticipates a higher turnover this year well. The contribution as a percentage to the GDP by the Exchange last year was Rs. 7.0 billion.
We are happy that there were more local investor interest in the market than foreign investors which is a sign that there is confidence in the CSE by domestic investors, Fernando said adding that despite a growth the market valuations are still below historical averages -around 10-12 percent below the 10-year average.
The CSE with the Securities and Exchange Commission of Sri Lanka (SEC) took steps to introduce the Delivery vs Payment system for stock market transactions with the aim to minimise the asset commitment risk of sellers.
The Exchange also took steps to set up a Central Counterparty (CCP) mechanism to bolster the capital market. The new SEC Act which came into force last year makes provisions for the setting up of a CCP.