CSE remains bullish on 10 new listings

• By Nishel Fernando 

The Colombo Stock Exchange (CSE) remains bullish on adding 10 new equity listings to the exchange by end of this year. 
While this is expected to be achieved by capitalising on the current growth momentum, some stakeholders find the target to be rather unrealistic. 

“There’s a target of ten new listings. We have already about three new listings in the pipeline. We are quite bullish in reaching this target,” CSE Chairman and First Capital Holdings PLC Managing Director/Chief Executive Officer Dilshan Wirasekara told Mirror Business. 

 Wirasekara in particular highlighted that undervalued stocks are driving the growth momentum. The ASPI closed at 12,404 points last week continuing the trends of the past week in reaching its highest levels since February 2022.

This development, along with the possible completion of external debt restructuring by end of June could be a further catalyst for growth, he added.
The CSE recently invited Expressions of Interest (EOIs) from prospective parties to develop a branding strategy in order to obtain equity and/or debt listing at the CSE and also to attract various investors.  The tender was closed on 22 April this year.

In phase one, the selected will be tasked with conducting research to understand the perception of key stakeholders on the CSE brand and value prepositions, in order to develop a value proposition for potential issuers and investors and overall brand strategy for the CSE supported by recommendations and action plans with justifications.

In phase two, they are required to engage with the CSE in determining strategy execution action plans conducting, participating in meetings, discussions and evaluating the effectiveness of implementation while providing guidance and recommendations based on outcomes.

Capital Alliance (CAL) Chief Strategist Udeeshan Jonas recognised this to be a timely action by CSE. However, he was rather skeptical of the target of 10 Initial Public Offering (IPOs) set by CSE stating there is “no chance” of pulling it off.

He pointed out that there’s no guarantee that even the IPOs already on the pipeline could materialise within this year. While highlighting that market has become profitable now, with current daily turnover averaging around Rs. 2.5 billion maintaining growth momentum, he noted that the upcoming election cycle could slow down this pace.

In order to attract new listings to the CSE, he stressed that an uptick in retail investors is crucial.  Data shows that as of February 2024, the CSE had about 681,763 local individual investors, 5026 foreign individual investors, 13,231 local institutional investors and 5,934 foreign institutional investors. 
The total value of holdings (both in equities and debt) by local individual investors amounted to Rs.708.89 billion when compared Rs. 2.47 trillion held by local institutional investors.