- At Tuesday’s meeting Finance Ministry Secy. reiterates united effort by all to revive Colombo Bourse
- To appoint all stakeholders-comprised Consultative Committee for regular dialogue and consensus
- Credit rule to be revised to boost retail participation; fresh support to brokers in the offing, among other measures
- Meeting with top listed blue chips to be convened next week to enlist their support and ideas
- SEC told to be professional over its regulation and investigations like the Central Bank rather than sensationalising via media or driving fear
- Record Rs. 25 billion net foreign inflow so far in 2012 to be further consolidated
By Nisthar Cassim
The message to stakeholders of the Colombo Bourse was loud and clear as it was repeated on Tuesday by Finance Ministry Secretary Dr. P.B. Jayasundera that the depressed market must be revived and on its part the Government has committed to spearhead this much-needed thrust.
Dr. Jayasundera told the Daily FT yesterday that the capital market stakeholder meeting on Tuesday was “positive and productive”.
This was as a follow-up to the 19 July forum chaired by President and Finance Minister Mahinda Rajapaksa, at which engagement too, the message from the country’s Chief Executive was that the “market must be revived”.
For Tuesday’s meeting, Dr. Jayasundera invited almost the same parties who attended the President’s Forum. They included Securities and Exchange Commission (SEC) Chairman Tilak Karunaratne, who was accompanied by Acting Director General H. Dissabandara, two Directors Chandu Epitawala and Vajira Wijegunawardane, Colombo Stock Exchange Chairman Krishan Balendra, Director Maxi Prelis and CEO Surekha Sellahewa, Colombo Stock Brokers Association President Sriyan Gurusinghe and his members as well as non-member brokers as well as investors Harry Jayawardena, Nimal Perera, K.C. Vignarajah and C.P. de Silva.
Tuesday’s engagement was after Dr. Jayasundera separately met with SEC Commissioners and CSE Directors last week.
“The market needs to be revived via a partnership by all stakeholders as opposed to them going in different directions. Such a collective effort will bring back confidence to the market and improve sentiments. This was communicated to all stakeholders present,” Dr. Jayasundera said.
Year-to-date the market is down by 19% with over Rs. 300 billion in value lost, whilst last year it was down by 8.5% after two years of a bull run, which made Colombo the world’s most consistent best performer. This achievement was linked to revival in investor sentiments and economic outlook following the end of the 30-year conflict.
To ensure a regular dialogue and to find consensus over short, medium and long term measures required to revitalise the capital market, a consultative committee under the chairmanship of Dr. Jayasundera will be set up shortly. Recommendations from the Committee will be considered for the upcoming 2013 Budget as well.
Dr. Jayasundera will also convene a meeting of top listed blue chips next week to get their views in terms of developing the capital market and get an update on their future investment profile.
He dismissed criticism from some quarters that the Finance Ministry shouldn’t get directly involved in revitalising the market but leave the responsibilities to different agencies such as the SEC, which also has a mandate to develop the capital market apart from regulating it, the CSE and the CSBA.
“The overall policy of the development of the capital market comes under the Finance Ministry and this initiative of bringing together all stakeholders is spearheaded in that spirit. The SEC and CSE can continue with their statutory functions such as regulatory and operational roles as well as address fundamental issues, all aimed at creating an enabling environment for a vibrant capital market,” Dr. Jayasundera pointed out, in addition to stressing that there was no political interference as well.
He said that the importance of reviving the market was acknowledged by all stakeholders at the meeting and the required policy support as well as incentives if required would be extended by the Government.
“We need to clear the mistrust if any among stakeholders and pursue a joint effort to revive the market and not destroy it and this was emphasised at the meeting. We also ironed out some of these issues and the Consultative Committee will take up any residual and future matters,” the Finance Secretary said, adding, “Positive sentiments must start from the very stakeholders before expecting it from investors.”
The SEC had been told to be more professional in its regulatory role, including the process of investigations. “The SEC can continue with its investigations, but as in the case of the Central Bank, greater professionalism along with directly dealing with the parties concerned with a level of discreetness was recommended rather than doing it via the media,” Dr. Jayasundera said.
The SEC and CSE also can proceed with their efforts to improve governance as well as simplify procedures aimed at creating a vibrant market. The need for pragmatic approach and a right balance with regard to regulation was also reiterated at Tuesday’s meeting.
Dr. Jayasundera told the Daily FT that broker credit rules would be revisited to make it more transparent and simplified with an emphasis on supporting more retailers to participate in the capital market.
“The Government will also look at incentivising the brokers to improve their capacities, risk management and market development,” Treasury Secretary said.
Tuesday’s stakeholder meeting was also told that it was important to take strength from the record net foreign inflow of over Rs. 25 billion so far this year, apart from further consolidating foreign interest.
Last year’s net outflow was Rs. 19 billion whilst in 2010 it was Rs. 26.3 billion.
Dr. Jayasundera said the high net inflow in 2012 was a clear testimony of the level of foreign investor confidence in the prospects of post-war Sri Lanka as well as the macro-policy framework of the Government.
At the meeting all stakeholders present were also told not to convey conflicting or wrong messages with regard to the outcome of Tuesday’s meeting. This was because the President’s Forum as well as Dr. Jayasundera’s meeting with the SEC and CSE saw conflicting reportage by the media.
Whilst there was a suggestion to have a joint press conference, it was later agreed that the Finance Ministry would be the spokesperson for Tuesday’s meeting.
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Message clear: Market must move up