COLOMBO, Nov 26 (Reuters) – Sri Lanka plans to double the
Colombo Stock Exchange’s .CSE market capitalisation from the
present $19.8 billion over the next two years by listing
companies partly owned by the state, the central bank governor
said on Friday.
Speaking at a Reuters forum in the capital Colombo,
Governor Ajith Nivard Cabraal said that will ensure there is
enough liquidity for foreign investors to take part in the
Indian Ocean island nation’s post-war economic revival via
Many institutional investors and funds trying to catch a
piece of the growth in Sri Lanka’s $42 billion economy since
the end of a civil war in May 2009 have shied away from the
share market, because of its small size and lack of free float.
“We are targeting a few billion rupees through listing
companies which have a government stake,” Cabraal said. “Some
big companies partially owned by the government may be listed.”
He also said that one or two privately-held conglomerates
and other large family businesses are headed toward listing.
“This will probably double the capitalisation,” Cabraal
Sri Lanka’s share market capitalisation is at 2.2 trillion
Sri Lanka rupees ($19.8 billion), having doubled in the first
10 months of 2010, with local investors and state-owned funds
surging into shares.
Foreign investors have sold a net 27.3 billion rupees in
shares this year, with most offshore interest having been
focused on government treasury securities which still offer an
attractive yield in the wake of the global financial crisis.
But the limit on foreign holding has been reached, leaving
investors searching for other ways to get exposure.
Sri Lanka is also aiming to double its per-capita gross
domestic product to $4,000 by 2016, and that means the banking
sector’s lending capacity has to be more than doubled to
achieve that, Cabraal said.
“Banks’ lending should be more than double to around 4
trillion rupees from the current 1,800 billion rupees in the
next five years to double GDP per capita,” he said.
Though the government is not considering relaxing a 100
percent tax on foreign property ownership, it has planned to
release prime property in the capital Colombo for large outside
investors, and to raise money through long-term leases.
Colombo has some of Asia’s most valuable and underdeveloped
seafront land, owing to a quarter-century civil war that made
tourism investment a risky prospect.
“We’ve agreed to release valuable land where army and
defence establishments are located and release them on
long-term lease,” Defence Secretary Gotabaya Rajapaksa, who is
also overseeing post-war urban development, told the forum.
Part of the process involves moving about 75,000 families
from slums and shanties in Colombo which are located on
valuable state property or road and railway reserves. The plan
is to build homes outside the capital for relocation, he said.
“We have to find a way to finance this because it is
expensive for relocation, but it is feasible. International,
local companies partnering with govt to build 30,000 homes over
next three years for slumdwellers’ relocation,” he said.
(Writing by Shihar Aneez; Editing by Bryson Hull)
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Sri Lanka aims to double share market cap by 2012