First post-pandemic investor forum makes strong case for investment flows into SL

The first post-pandemic ‘Invest Sri Lanka’ Investor Forum organized by the Securities and Exchange Commission of Sri Lanka (SEC), Colombo Stock Exchange (CSE), in association with the Embassy of Sri Lanka in UAE and the Consulate General of Sri Lanka to Dubai and Northern Emirates was recently held at the Sheraton Grand Hotel in Dubai. 

A joint press release issued by the SEC and CSE said the forum made a strong case for investment flows into Sri Lanka.  

“The event drew a strong turnout and a full house of leading Dubai–based Sri Lankans across multiple industries and was graced by Central Bank Governor Ajith Nivard Cabraal as the keynote speaker,” the statement said.
While maintaining that clarity and stability have been restored, Cabraal in his keynote invited investors to invest in the growth story of Sri Lanka and its capital market. 

“The time is now, for you to take up positions, we still have a lot of potential for the stock exchange to grow. I remember in 2014, if you look at the market capitalization, in dollars, it was about 25 billion after seven years, even notwithstanding the growth in numbers that was mentioned by the Chairman of the Securities and Exchange Commission as well as by the Chairman of the Colombo Stock Exchange, the market capitalization is still lower in dollar terms, as far as all the companies are concerned. 

If you work it out today, it will be less than US$ 25 billion. So what does it say? It says that there is latent potential, and latent strength within the Sri Lankan market, the Sri Lankan equities that we haven’t still been able to realize,” he said.

SEC Chairman Viraj Dayaratne speaking at the event highlighted that the market regulator has enhanced surveillance supervisory functions in order to ensure the integrity of the market as the number of trades that take place increased tremendously.

“One other significant achievement was the enactment of the new Securities and Exchange Commission Act that was on the cards for several years. 

The new law was brought in and I must tell you, that not only does it help better regulation, but it provides a lot of opportunities for the development of the market, it will be possible for us to introduce new products, then it will be possible to facilitate the setting up of new funds. And that means creating more opportunities for you to invest,” he added. 

CSE Chairman Dumith Fernando who also spoke at the event said “all the stars are still very much aligned for continued performance in the stock market in Colombo,” pointing out the recent meteoric rise of the indices of the CSE.

“First, like most markets around the world we are in a low interest rate regime. This has created very low real interest rates, which has made alternative investments a lot less attractive than the equity markets to many investors. So a significant number of investors have joined the stock market in the last year. Secondly, the fundamentals are very strong. Corporate earnings are at record levels,” he said.

He pointed out that the Sri Lankan stock market is undervalued in relative terms by 20 percent to 25 percent. “So, we do believe that there is still reasonable upside for anyone who wants to participate.”