CSE and SEC host exclusive forum on Sri Lanka’s capital market

From left: Shiran Fernando, Dr. P. Nandalal Weerasinghe, Prof. Anil J. Fernando, Senior Prof. D.B.P.H. Dissabandara, Dr. Naveen Gunawardane, and Dimuthu Abeyesekera

Institutional Fund Managers during the Q&A segment of the panel discussion

The Securities and Exchange Commission of Sri Lanka (SEC) in collaboration with the Colombo Stock Exchange (CSE) successfully convened an exclusive forum for institutional fund managers themed “Be a Part of the Capital Market’s Growth Story – One Vision for A Resilient Market” recently.

The forum, directed towards the nation’s foremost institutional fund managers, was a high-level platform for the collaboration in exploring and capitalizing on opportunities that the Sri Lankan capital market offers.

The forum serves to underscore the steadfast commitment of SEC and CSE to facilitate the long-term creation of value and to bolster institutional engagement in rising capital market growth. 

The proceedings were marked by the presence of several senior experts from the public and financial sectors, including Prof. Anil J. Fernando, Minister of Labour and Deputy Minister of Economic Development; Dr. P. Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka; Senior Prof. D.B.P.H. Dissabandara, Chairman of the SEC; Dimuthu Abeyesekera, Chairman of the CSE; Rajeeva Bandaranaike, CEO of CSE; and Dr. Naveen Gunawardane, Co-Founder and Managing Director of Lynear Wealth Management.

A high-level panel discussion formed the principal component of the programme moderated by Shiran Fernando, Chief Economic Policy Advisor of the Ceylon Chamber of Commerce. 

The panel discussed the future of allocations into equity amidst the ongoing financial climate, the role of digital democracy in maintaining the government’s policies of good governance, the SEC’s new strategic plan “12 Pillars One Vision for a Resilient Market” as well as questions from the investment fund managers, such as the role of the EPF and ETF moving forward. The robust exchange afforded fund managers the opportunity to examinelong-term investment paradigms and the growth of the capital market.

Prof. Anil J. Fernando, Minister of Labour and Deputy Minister of Economic Development, in his keynote address, articulated the government’s perspective on the favourable investment culture that has arisen in the country through the stabilization of inflation at 5 percent, assuring the forum that “Our Government’s key role is that of a facilitator rather than being a part of the politicization. 

Giving the freedom and autonomy for all these agencies to come out with your expertise and competencies.” To that end, the Minister stated that the government’s pre-existing guidelines on the capital market aimed at creating a level playing field, enforce rule of law, and bring new enactments to enhance investor confidence.

During the panel discussion Central Bank Governor, Dr. Nandalal Weerasinghe, touching on Dr. Gunawardane’s presentation, spoke of how the ongoing commitment to fiscal discipline has and will continue to produce a sustained positive current account balance. 

He added,“We have generated domestic savings which is more than enough for investment needs in the country. This is a new situation.” He compared the current macro-economic environment to past decades, which were marked by current account deficits and constrained domestic savings. Furthermore, the Governor stated that stable inflation in a low interest environment would encourage investors seeking returns to look beyond just the banking sector.

Asked at the panel discussion about the SEC’s landmark strategic plan titled “12 Pillars One Vision for a Resilient Market” Senior Prof. D.B.P.H Dissabandara, Chairman of the SEC, reiterated its applicability to institutional investment funds – specifically the consolidation of funds, both domestic and international.

Dimuthu Abeyesekera, Chairman of CSE, noted the underrepresentation of the population in the capital market was a barrier to growth, with Sri Lanka’s 50,000 active investors amounting to only 0.2 percent of the total population. 

He explained that outreach beyond the Western Province is necessary, as account openings outside the province currently represent only 39 percent of the total openings.CSE has already established ten branches outside Colombo, with branches in all nine provinces and aims to create twenty-five branches – a branch per district. 

Rajeeva Bandaranaike, CEO of CSE, contextualized the forum’s role, outlined the history of share trading in Sri Lanka, and highlighted the role the CSE plays as it commemorates its 40th anniversary. 

Finally, in his presentation, which primed the panel discussion, Dr. Naveen Gunawardane, Co-Founder and Managing Director of Lynear Wealth Management, spoke on the paradigm shift in equities. In his in-depth analysis he explored how the transformed macro-economic environment, resulting from the government’s financial discipline, would compel institutional funds to reconsider sole reliance on the debt market if they wished to achieve their target returns. 

The forum is part of a broader initiative to engage the wider investor market in the healthy growth currently underway in the capital market, and to empower institutional investors to exercise judicious allocation decisions that support both growth and portfolio diversification.