The new chief of the Colombo Stock Exchange (CSE) Ray Abeywardena said his focus would be to increase the market capitalization of the Stock Exchange to a satisfactory level from its current position which is not at all satisfactory.
Abeywardena who took over the reins from Vajira Kulatilaka last week said he would take steps to increase the market cap and the liquidity position in the Stock Exchange. He said the market cap of the CSE as a percentage of the GDP in 23 percent where as in India it is over 80 percent, Malaysia is over 145 percent and in Thailand it is 107 percent. Therefore, its very clear that our market remains small compared to some of the regional markets.
“The daily turnover is dismal and hovers around USD seven million where as it is USD 88 million in Vietnam and USD 100 million in Bangladesh.
We need to focus on increasing the market cap for which there has to be more listings in the Stock Exchange,” Abeywardena said.
The CSE which has been recording a low turnover for a considerable period due to the global market volatility showed some signs of recovery with the market cap surpassing Rs.3.5 billion last week.
“We have to boost the confidence of investors that the market is safe and provides a fair and transparent frame work to trade,” Abeywardena said.
He said the CSE competes against high interest, where people can get a safe return in a fixed deposit or on a Treasury Bill rather than try and make money in the stock market. That is why it is imperative that we send out the right signals to investors.
“Companies continue to do well and earnings are good. This is reflected in their valuations. We need to build investor confidence. Investors must be educated not to speculate with all their savings, rather they study the market and invest carefully. We will continue with awareness campaigns and investor conferences to promote capital market investment,” Abeywardena said. The new CSE head plans expedite the introduction of the Delivery versus Payment system that would help boost investor confidence.
He also said steps would be taken to set up the Central Counter Party clearing house to develop the market.
Abeywardena is the Managing Director of Acuity Partners (Pvt) Limited.