CSE and SEC initiates effort to restore confidence among foreign investors

The Colombo Stock Exchange (CSE) and the Securities and Exchange Commission of Sri Lanka (SEC), in a bold step to reassure foreign investors, recently organized an Invest Sri Lanka Forum targeting portfolio and direct investors in Singapore. The forum drew an encouraging response from investors, who were offered an assessment of the investment climate and expectations for the short-medium term, considering the context of the Easter Sunday attacks that took place on 21 April 2019.

The event was organized in association with the Sri Lankan High Commission in Singapore and supported by the Singapore Business Federation in the capacity of promotional partner. Asia Securities was the Exclusive Platinum Sponsor of the event, while Sri Lankan Airlines was the Official Travel Partner.

Investors also attended a number of one-to-one and group meetings with Sri Lankan listed companies that travelled to Singapore for the Invest Sri Lanka Initiative, which included Chairmen, Chief Executives and Senior Management representatives of John Keells Holdings PLC, Commercial Bank of Ceylon PLC, Dialog Axiata PLC, Hemas Holdings PLC, Sampath Bank PLC, Peoples leasing and Finance PLC, National Development Bank PLC, Softlogic Holdings PLC, Softlogic life Insurance PLC and Sunshine Holdings PLC. The event was also supported by the Sri Lankan Stock Brokering community and respective partners based in Singapore, with 8 Sri Lankan firms present at the event.

The State Minister of Finance Hon. Eran Wickramaratne, the Governor of the Central Bank Dr. Indrajit Coomaraswamy, SEC Chairman Mr. Ranel T. Wijesinha, CSE Chairman Mr. Ray Abeywardena, and the Managing Director at LYNEAR Wealth Management Dr. Naveen Gunawardane spoke at the event while CSE CEO Mr. Rajeeva Bandaranaike and SEC Director General Mr. Vajira Wijegunawardane joined in as panelists during the discussion segment. The panel discussion was moderated by Senior Advisory Board Member and Past President of the Singapore Sri Lanka Business Association Mr. Manjiv Dodanwela.

The State Minister of Finance Hon. Eran Wickramaratne speaking at the event acknowledged that the events on 21 April were a setback, but noted that all possible steps to ensure national security have been implemented during the past month, including apprehending elements that were responsible for the attacks. The State Minister also said that Sri Lanka has witnessed overwhelming support internationally from foreign governments, institutions and the international community at-large, who have expressed solidarity with Sri Lanka during recovery and response efforts. The State Minister commended the resilience of the Sri Lankan people, stating that the effort to restore normalcy during the past month has been solidified by the drive and unity of the Sri Lankan people. Commenting on the economy the State Minister stated that the government will remain committed to fiscal consolidation despite the setback but will endeavor to support businesses and industries that were severely affected, affirming that the government has already introduced a relief package for the tourism sector.

Speaking at the event, the Governor of the Central Bank Dr. Indrajit Coomaraswamy stated that the fact that the robust macro-economic fundamentals which were evident before 21 April have remained in-tact post the tragic events offers reason to be optimistic on the ability of the economy to recuperate in the short-term. Continuing to comment on the economic impact of the attacks, the Governor stated that while there will be a hit on growth, particularly due to the effects on the tourism sector and its supply chains, a large majority of the economy has remained completely untouched and unaffected by the events. “If you look at the economy, it is very much in-tact. So the capacity to bounce back is clear, if we can restore stability – and we have gone a long way towards doing that. If you take a medium-term view of Sri Lanka, the potential is enormous. We will get through these disturbances, as tragic as they were, and bounce back”, the Governor added.

SEC Chairman Mr. Ranel T. Wijesinha stated that both foreign direct and portfolio investors have always considered Sri Lanka as an investment destination and said that there is clearly reason to believe that foreign investors will continue to invest in the market. Mr. Wijesinha also noted that the SEC wishes to continue its strong commitment to conducting initiatives focused on attracting PUBLIC investments to the market and to ensuring the quality of the investment options available. “We in Sri Lanka are deeply committed at all levels, including Government, Institutional, the Capital Market and other levels, to maintain the momentum that has been achieved in the past few years and especially to re-attract investors that may have left and to attract new investors”.

Commenting on the thinking behind organizing the event at this juncture, the CSE Chairman Mr. Ray Abeywardena stated that the Forum aims to offer perspective on why investors from around the world, especially those with investment holdings in Sri Lanka, should remain optimistic about the Sri Lankan story going forward. “Many researches done on the impact on domestic and global financial systems as a result of terrorist acts indicate that markets in affected countries have bounced back sooner than expected. In-fact, the immediate aftermath of these events have offered investors excellent investment opportunities - if entered into at the right time. Our observation so far is that foreign investors have read this risk perhaps more factually and objectively. We have continued to see buying interest in certain sectors by global funds”, he added. According to the CSE Chairman and in a noteworthy statistic, foreign investors have bought more stocks than they have sold during the past month, with a net inflow of Rs. 231 million since 21 April.

Sharing his thoughts on investing in Sri Lankan equities from a buy-side perspective, the Managing Director of LYNEAR Wealth Management Dr. Naveen Gunawardane said “As long term investors, this is the time that you should be really looking at the market, because you want to buy when there are opportunities through short-term shocks. The equity markets are cheap; the valuations are very attractive and although liquidity is quite tight, what we have seen is that you can actually build up positions provided that you have a bit of patience.” Particularly, Mr. Gunawardane noted that the Sri Lankan banking sector shows remarkable valuations compared to its peers in Asian frontier markets and should garner the attention of investors, especially considering the fact that the sector is well-regulated, conforms to international reporting and financial risk management frameworks, delivers consistent returns and practices strong governance.

The CSE and SEC organize “Invest Sri Lanka” Forums among investors based in key financial centers around the world. The forums are conducted in key foreign markets, based on factors such as investment holding, institutional fund manager presence and other trends. The CSE and SEC have previously conducted Forums in the UK, USA, Singapore, Australia, New Zealand, UAE, India, Switzerland and Hong Kong. This was the 4th Invest Sri Lanka Forum conducted in Singapore.