No better time to be in capital markets than today: CSE Chairman

• By Nishel Fernando 

Undervalued stocks on the back of a recovering economy, backed by critical reforms, present investors with a rare investment opportunity to come into the market, according to Colombo

Stock Exchange (CSE) Chairman Dilshan Wirasekara.
“Last 18 months have been the most exciting time for capital markets; it has been a rollercoaster ride. I think the times ahead are going to be even more exciting. As you see, we hit rock bottom; now we are on an upward trend. We are very bullish and I don’t think there’s a better time to be in capital markets than today,” Wirasekara said.

He shared these remarks addressing the 11th Capital Markets Conference (CAPM) organised by UTO EduConsult Ltd and supported by the CSE, in Colombo, last Thursday.
He noted that the All Share Price Index (ASPI) has risen by 22 percent so far during the year, recouping over half of the decline seen last year amid an unprecedented economic crisis. 

Similarly, the more liquid S&P SL20 index also has recorded a 14 percent growth so far during the year. In addition, he emphasised that the CSE continued to witness net foreign inflows to the market, which is an encouraging sign. “When you look at regional markets, we are easily doubled in price earnings, maybe 1.5-17 times of price to book. So, there’s value,” he added.
Wirasekara credited the policymakers, technocrats and bureaucrats in particular for getting the International Monetary Fund programme in line and pushing the critical reforms forward for economic recovery.

“We completed the DDR; people may say different things but I believe the government made the right decision by not giving too much pain to the banking system and others,” he added. Wirasekara opined that a market correction is likely in the coming period, encouraging more companies to come into the market to raise capital.
He noted that already two firms have received the CSE approval for IPOs while another three to five companies are in the pipeline.
Moving forward, he was confident that capital markets would take the leading role in driving the economy as similar to other economies, in particular due to various constraints in the banking sector after taking multiple hits.

While pointing out that the main weakness of the country’s capital markets is the lack or the insignificant public participation, Wirasekara opined that it is mostly due to lack of knowledge and financial literacy rather than lack of confidence. 
According to him, only 50,000 are engaged in active trading, out of nearly one million CDS account holders.
As a solution, he noted that the CSE is lobbying to include capital markets as a subject in the school curriculum.
Further, he stressed that the CSE should move to a more research-driven market from the current sentiment-driven market.