The Colombo Stock Exchange (CSE) will be implementing several measures to attract more foreign investment into the market, hoping to increase foreign contributions to total turnover, according to Chairman, CSE, Krishan Balendra.
“Turnover through domestic trading increased to 90% of the total from 81% in the previous year. We have prioritized the implementation of certain structural changes to attract portfolio investment flows as this skewed investor mix is not optimal for the long term development of the Exchange” Balendra said in CSE’s 2011 annual report.
He stated that the implementation of a cohesive risk management system, in addition to improvements to the market’s technology infrastructure and the CSE’s own organizational structure and processes would be amongst the areas that would receive a greater priority over the course of the year.
The restructuring of the CSE’s organizational structure in particular will be given high priority, according to Chief Executive Officer, CSE, Surekha Sellahewa.
“We have already identified gaps and initiated strategic mapping for our transformational journey. The CSE feels the pressing need of developing its organizational and governance structure. In this area, talent pool development must be addressed as a matter of priority.” Sellahewa said in her review to the annual report. Foreign investors in the market remained net sellers during 2011, recording a net outflow of approximately Rs.19 billion.
Foreign institutional investors contributed 8.3% to total market turnover last year, generating Rs 45.2 billion, down sharply from Rs 87.1 billion in 2010, whilst individual foreign investors generated a turnover of Rs 14.1 billion or 2.6% of total market turnover, compared with Rs 18.5 billion in 2010.
Total market turnover stood at Rs 546.3 billion in 2011, with 54.6% of turnover being generated by domestic individual investors, while domestic institutional investors contributing the remaining 34.5% of turnover.
However, foreign investors have been net buyers so far this year with a net inflow of approximately Rs.23 billion.