SEC says 2024 a challenging year but hope remains for economic growth

The capital market regulator, the Securities and Exchange Commission (SEC), highlighted 2024 would be a challenging year in terms of economic recovery and path to growth but there is hope, as the economy is on the right track.

“Positivity and a positive mindset are crucial factors to pull ourselves out of the crisis. The present crisis gives us a chance to come out of it with our right side up and that we must do. Now is the time to do the right things towards long-term stability,” said SEC Chairman Faizal Salieh in the entity’s annual report (2023) released yesterday.

To foster a robust capital market ecosystem, in 2023, the SEC introduced a comprehensive Capital Market Reforms Agenda for the period 2023-2025, comprising of 12 key initiatives aimed at promoting growth, innovation and sustainability in the securities market. 

The regulator identified institutional capacity building as a key priority for 2023, in order to enhance its overall efficiency and effectiveness and specifically fulfil its regulatory role and responsibilities under the new and expanded SEC Act. 

“Critical areas that required early and expeditious action were in the human resources and technology spaces of our operations,” said Salieh.

In 2023, the All Share Price Index (ASPI) witnessed a growth of over 25 percent in comparison to the year 2022. 

The rebounding of the ASPI helped erase much of the losses that were recorded in the year 2022.

Similarly, the S&P SL 20 index ended the year on a positive note, with a growth rate of over 16 percent. 

On the contrary, the daily average turnover dropped to Rs.1.69 billion in the year 2023. However, the market remained in the forefront in capital formation as it helped to raise Rs.56.7 billion in the year under review. 

Further, foreign investors remained interested as the total net foreign inflow surpassed the Rs.6 billion mark in 2023. 

Additionally, a marginal increase in foreign investors’ contribution to total market turnover was witnessed in the year, while the local individuals continued to play a dominant role in activity levels of the market throughout the year. The market capitalisation to gross domestic product ratio remained at a moderate level of around 18 percent. 

SEC Director General Chinthaka Mendis said efforts are made to continue to engage in robust regulation and market development activities with a view to enhance the capital market footprint in the country. 

“The key to building a deep and liquid market is building investor trust and confidence in the market. It is important to understand that the capital market plays a pivotal role as a source of financing for businesses to meet their capital requirements while creating investment avenues for investors,” he said.