Following the conclusion of the capital market road show in Mumbai in February which drew over 150 foreign fund managers, the Colombo Stock Exchange (CSE) is currently planning three more road shows in major commercial hubs in the Asian region.
According to CSE Chairman, Krishan Balendra, the three destinations earmarked are Hong Kong, Singapore and Middle East.
When asked of the possible time frames of each of those major events, he said that the road show in Hong Kong will take place in June-July.
“This will be followed by the road shows in Singapore which is expected to be held by October and in Middle East around November,” he said.
Meanwhile speaking on the matter the Securities and Exchange Commission Chairman, Dr. Nalaka Godahewa who was also a key figure in the Mumbaibound delegation said, “There has to be a reasonable time gap in between two road shows, particularly for our local capital market participants to have a breathing space.”
Dr. Godahewa also stressed the importance of scheduling any road shows during a time period suitable for foreign fund managers, as the main intention of these events is to lure the foreign investors.
Time has never been opportune for the Lankan capital market stakeholders to conduct road shows in major commercial hubs as the country has once again come in to international investors’ radar. Unlike many other markets, CSE’s attractive Price Earnings valuations of 14 times and earnings forecasts and the Debt Equity Ratio of 64.5 percent against world average of 125, provide a unique opportunity for the foreign investors.
According to SEC Chief, in an attempt to address the problem of lack of funds in the market, steps are currently underway to allow pension funds in the likes of Employees Provident Fund (EPF) to play a more active role in the capital market.
“In fact the attempt is to address the issue of lack of local and foreign funds in the market. When local investors shy away, one needs strong foreign participation to keep the market active. Assistance will also be provided to brokers who want to invite reputed international fund managers to visit Sri Lanka for fact finding,” he said.
The fact that foreign net investments to the Colombo bourse peaked at Rs.39 billion in 2012—of which 65 percent from first time investors—provides a clear indication that CSE is among the preferred location for foreign investors.
On the contrary, Lloyd Fisher, an emerging markets investor raised concerns of the lack of liquidity in the Sri Lankan stock market at a recently held forum.
An experienced investor particularly in Asian markets who has been investing in the CSE for the past one year said, “For a foreign investor who invests in stocks should also be able to exit when they want – i.e liquidity,” he remarked.