The Central Bank Governor recently said that it is now the best opportunity to increase investments in the stock exchange. Dr. Indrajit Coomaraswamy made these comments at the Colombo Stock Exchange (CSE) just hours before the policy rates were increased by 50 basis points. “When the future is positive, one could argue that this is a buying opportunity,” he said.
The increased rates may result in investors divesting shares in favour of bank deposits and other fixed income securities. However, the prospects of a United States Federal Reserve rate hike now looks remote, given the dim global economic outlook. Asian stock exchanges, including the CSE, have been experiencing a downturn recently due to a Fed rate hike last year and expectations of further hikes this year, as well as economic woes in China.
Investors have been seen securing investments in gold. “I’m aware that I’m here with you today at a time when the market sentiment is subdued, very much subdued. If you look at the turnover, market capitalization, pricing, etc., this is not the best of times,” Dr. Coomaraswamy added. However, he said that the government’s economic plans for the future would genuinely create a stable platform for businesses to thrive and the investors would see this when Prime Minister Ranil Wickremesinghe announces his five-year economic policy in the coming weeks.
“When the market has this visibility about a better future, it is sometimes a really good ingredient for stronger sentiment,” he said. He noted that the bourse has a lot of responsibility to create a platform that can match investment opportunities for local and foreign savings, which is seeing good progress. CSE Chairman Vajira Kulatilaka noted that the CSE is likely to see a boom in 2017 and the current slump is being used very productively to bring in better trading instruments, new products and better rules and regulations so that the bourse is ready for the future. (CW)