Stock market investors hold “wide-ranging discussion” with Capital Market Minister

From right:  Muslim Salahudeen,  Haqque-Hiline, NimalPerera, Imtiaz Buhardeen, Ramanan Govindasamy , Sashimal Fernando  and Mushtaq Fuard in discussion with State Minister Cabraal

• A few high net worth investors meet Cabraal over broker credit, forced selling
• State Minister’s intervention expected to bring sustainable solutions for the issues
• Possibility of getting State funds to invest in the current market downturn may be looked into
• State Minister to hold more frequent discussions with wider section of stakeholders 

A few high net worth stock market investors met with State Minister of Money & Capital Markets and State Enterprise Reforms, Ajith Nivard Cabraal last week to discuss a sustainable way forward for the country’s capital market, which saw increased investor participation in recent times, largely due to lower interest rates and limited options for other investments. 

The investors who met the State Minister were, Muslim Salahudeen, Haqque-Hiline, Nimal Perera, Imtiaz Buhardeen , Ramanan Govindasamy, Sashimal Fernando  and 
Mushtaq Fuard.

Among the main topics discussed were, broker credit, forced selling by brokers, protection and education of retail investors, possibility of encouraging State-run funds to invest in the market during the current market correction and to have stakeholder meetings with the State Minister on a regular basis to discuss ongoing issues and potential solutions. 

“The investors wanted to know my views about margin calls, stock exchange demutualization plans, new IPOs, rights issues, interest rate outlook, growth prospects, forex inflows, and plans for capital market development,” State Minister Cabraal told Mirror Business when inquired about what was discussed during the meeting. 

“It was a wide-ranging discussion and I suggested that they organise a discussion with a wide participation of investors in the near future. They agreed and promised to organise such a forum shortly,” he added.

Meanwhile, it is widely expected that the State Minister will discuss with brokers to advise them to allow broker credit in a sustainable manner, without creating a panic situation, which leads to forced selling. He is also expected to discuss with banks to allow margin facilities to investors in a sustainable manner without creating an over-credit situation. 

During the meeting, the State Minister had also reportedly agreed to have a Q&A session with all stakeholders, which will be open to the general public, and he had requested the investor group who visited him to help organise this event. 

Colombo Stock Exchange (CSE) still offers attractive valuation compared to regional peers, and according to market analysts retail investors should look to buy and hold for at least a year without looking to day-trade and make quick profits all the time, which could results in over-credit and forced selling.

While assuring that the current low interest rate regime will remain unchanged for a considerable period of time, the State Minister during the meeting had also reportedly agreed to discuss with relevant institutions to look into the possibility of getting State funds to invest in the market during the current downturn. 

Meanwhile, Cabraal’s ministry is expected to come up with a number of new proposals to attract foreign investment to Sri Lanka, including to the stock market, which may include a resident visa programme for interested foreign investors.