Fri, 29 Mar 2024 Today's Paper

EPF hunts for bargain stocks eyeing capital gains

By

4 June 2019 12:00 am - 0     - {{hitsCtrl.values.hits}}

A A A

By Nishel Fernando 
Sri Lanka’s largest pension fund, the Employees’ Provident Fund (EPF), will hunt for bargain stocks in the Colombo Stock Exchange (CSE), eyeing capital gains under the Central Bank’s strengthened and decentralised investment operation mechanism.
“A key reason we decided to return to the stock market in this point is that the share market is extraordinary undervalued at the moment. The best companies in the country sometimes are valued below the book value. It’s a clear buying opportunity,” Central Bank Governor Dr. Indrajit Coomaraswamy said.
Central Bank Deputy Governor H.A. Karunaratne noted that the Investment Committee of the EPF, which comes under the purview of the Monetary Board of the Central Bank, would look at bargain opportunities in the CSE to make capital gains for the fund, in addition to other stocks, which offer attractive dividends.
According to the Central Bank, the EPF, which stood at Rs.2.3 trillion last year, grows at a rate of Rs.300 billion per annum.
Thus, Dr. Coomaraswamy pointed out that the Central Bank is looking at other avenues to invest the funds of the EPF as the opportunities to invest in the government security 
market shrink.
“The government’s borrowing requirement is coming down; hence, we have to find different avenues to invest the EPF funds. Clearly, the stock market is one such avenue,” he said. An estimated 90 percent of the EPF funds are invested in government securities as of last year.
In terms of processes and procedures of the EPF, the Central Bank has segregated the management and oversight of the fund to different divisions 
of the bank.
The governor noted that the Investment Committee of the EPF meets on a daily basis to undertake investment decisions, which is being monitored by an Investment Oversight Committee led by a deputy governor and two assistant governors.

“Moreover, the security measures such as CCTV, voice recordings have also been introduced in order to have greater monitoring of what’s going on, in terms of investment activities,” he added.
The EPF officers are also required to seek the approval of the Monetary Board to pursue with their investment decisions.
Dr. Coomaraswamy revealed that a separate unit of the Central Bank, the Risk Management Department, has been tasked with the drawing up of investment guidelines for the EPF, which would be completed soon.
In a bid to increase the transparency of the fund, the Central Bank stated that investment operations, which include investments in equities, would be published on the EPF website on a quarterly basis.
In 2018, the interest payments to the EPF members fell to a 10-year low of 9.54 percent, which was due to a decline on return on investments and due to increased taxes.
Karunaratne noted that the EPF was subjected to income tax last year and paid Rs.11 billion.
Before returning to the stock market almost a month ago, the EPF’s equity portfolio included investments in 82 listed firms, worth of Rs.56.4 billion, below the original purchase value of Rs.80.6 billion.
In addition, the EPF held shares of 12 unlisted firms, worth of Rs 9.9 billion.

 


Order Gifts and Flowers to Sri Lanka. See Kapruka's top selling online shopping categories such as Toys, Grocery, Kids Toys, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,Astrology, Courier/Delivery, Medicine Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka

  Comments - 0

Order Gifts and Flowers to Sri Lanka. See Kapruka's top selling online shopping categories such as Toys, Grocery, Kids Toys, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,Astrology, Courier/Delivery, Medicine Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka

Add comment

Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

Reply To:

Name - Reply Comment





Order Gifts and Flowers to Sri Lanka. See Kapruka's top selling online shopping categories such as Toys, Grocery, Kids Toys, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,Astrology, Courier/Delivery, Medicine Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka

VAT increase: SOUNDs death knell for publishers, readers

Though the Government imposed VAT (Value Added Tax) on vegetables and other e

How female change-makers are driving Sri Lanka’s energy saving platform

Saving energy has become more of a responsibility than a habit in today’s c

A dull Ramadan awaits Muslims amidst the Soaring Cost of Living

In the coming days, Muslims across the world will welcome the Holy Month of R

New wildlife underpass to curtail HEC

As of February 2024, Sri Lanka lost another 38 elephants as a result of the H