The ninth annual CFA Capital Market Awards organised by the CFA Society Sri Lanka, due to be held this month. recognises and rewards professionals who have established benchmarks for the advancement of domestic capital market participants.
In the lead-up to the event, the CFA Society shines a light on winning entities from the 2021 edition of the awards, giving voice to valuable insights from participating over the years.
The Best Equity Research Report is one of five major accolades presented at the CFA Capital Market Awards. Through this, CFA Society Sri Lanka aims to reward and recognize analysts producing best-in-class research, and promote best practices in fundamental equity research and an informed, efficient capital market.
Softlogic Stockbrokers has bestowed the Gold award in the Best Equity Research Report category for 2021.
Managing Director Softlogic Capital PLC, Iftikar Ahamed said, “Softlogic Stockbrokers have taken part in the awards since its inception, winning a number of accolades over the years. Our research team at Softlogic Stockbrokers continuously strives to provide timely and relevant insights to our investors and our internal investment decision-makers. Therefore, we commend CFA Society Sri Lanka for recognising industry analysts and providing them the incentive to raise standards further.”
Head of Research at Softlogic Stockbrokers Mahesh Udugampala said, “It plays an important part not only at Softlogic Stockbrokers but across the Softlogic Capital arm of the business, including corporate finance and fund management. All our recommendations are backed by in-depth analysis and research.”
There are, however, challenges in conducting company research, with limited access to company details and data not being comparable across sectors chief among them. Udugampala also notes that on the macroeconomic side, while Sri Lanka’s databases are considered relatively good for a developing country, access to information is not on par with developed countries and so improvement is needed.
Although there’s been an improvement over the years in terms of transparency, many companies are yet to fully appreciate that being transparent with company information can lead to better research and valuations, he said.
Maintaining consistency in research publications is vital, as is striking a balance so that investors are not overwhelmed with information.
“It can be challenging to be consistent with research because, from a Sri Lankan perspective, macroeconomic conditions seem to change every day. But we look to provide core coverage in a consistent manner, without spamming investors, who are becoming increasingly busy and don›t have the time to read through all of the research reports available,” Udugampala said. From an analyst’s standpoint, it is also important to have soft skills – being able to articulate investment themes and speak with investors – as well as an understanding of the ground realities, according to Udugampala.
“Many broking houses and research analysts are Colombo-centric and tend to miss out on what›s happening in the rural economy. As an analyst, it›s important to have a finger on the pulse of what›s happening out there in the villages and how the demand dynamics change,” he said.
On the subject of Environmental, Social and Governance (ESG) reporting, he said that while most companies are usually focused on governance, there is an increased focus on sustainability reporting, with environmental and social aspects gaining traction, with CFA also promoting these practices.
“There have been many programs conducted and investors are increasingly looking at this area. The CFA Research Challenge criteria include a separate section on ESG concerns, which encourages analysts to consider those angles when researching a company,” he said.
Manager, Equity Research at Softlogic Stockbrokers, Shadini Silva said, “We are seeing more focus on sustainability. Listed corporates are placing greater emphasis on sustainability practices in their financial reports as well.”
Softlogic Stockbrokers’ Gold award-winning achievement at the 2021 CFA Capital Market Awards is mainly attributed to its report incorporating in-depth research, coupled with presenting it in a manner that was easy for investors to absorb and understand, he said.