In what continues to be a promising year for foreign investor involvement at the Colombo bourse, 2017 has recorded an all-time high foreign investor interest, with Rs.105.1 billion (year-to-date) in foreign purchases, passing the previous record of Rs.104.7 billion set in 2014.
The development follows signs of renewed foreign interest in the stock market in mid-2017, during which, the foreign purchases recorded for the first half of 2016 doubled in 2017 and recorded an all-time high for foreign purchases in the first half of a calendar year. Such foreign purchases have contributed to a net foreign purchase figure of Rs.18.9 billion (year-to-date), a figure that is substantial compared to the foreign activity in 2015/16.
The growing foreign interest in the market has also contributed to a 30 percent improvement in the daily average turnover, where the figure has improved to Rs.955 million (year-to-date) from Rs.737 million in 2016.
The record continues to indicate that foreign investors have been quick to identify the buying opportunities in Sri Lankan stocks, the Colombo Stock Exchange (CSE) said.
“An attractive market valuation (P/E), encouraging performance among listed entities, dividend payments and capital gains tax exemptions offered to share transactions are considered to be defining factors in attracting the level of foreign investor interest the market has witnessed in 2017,” the CSE added.
Commenting on the development, CSE Head of Market Development Niroshan Wijesundere stated that improving the levels of foreign investor involvement has provided the CSE an opportunity to create awareness on the stock market across all
He went on to add that in the midst of a number of positives so far this year, the market continues to trade at a discount compared to the regional peers and offers further opportunities for investors— with a market P/E recorded at 10.72 as of today and a majority of listed companies trading below book value.
“The positive macroeconomic outlook will also offer both foreign and local investors further confidence in the Sri Lankan stock market,” Wijesundere added.
The CSE in association with the Securities and Exchange Commission of Sri Lanka (SEC) resumed a concentrated effort to create awareness on the opportunities in the capital market in key foreign markets this year, through ‘Invest Sri Lanka’ forums in Sydney, Melbourne, Auckland and most recently in New York.
Foreign institutional investors and Sri Lankans living abroad present at these events indicated a sense of optimism on the investment opportunities surrounding the progressive economic reforms presently being implemented in the country.
In a related development, foreign purchases in the stock market originating from Australia in a particular year recorded an all-time high in 2017, with a figure of Rs.651 million by the week that ended November 17, 2017.
The CSE and SEC have also launched an islandwide local retail investor-focused Investor Forum campaign to create awareness on the record foreign investment and potential opportunities in the market for local investors.