Visiting foreign delegates yesterday raised concerns regarding key elements of the local capital market, indicating exercising of caution before investing in the country.
During an interactive panel discussion at the Capital Market Conference 2014, potential investors sought clarification from the regulators themselves on areas such as availability of liquidity, transaction costs and probable impacts on Sri Lanka due to interest rates increase in the US.
While investors pointed out that challenges observed by them in the local capital market are the “sheer lack of liquidity” and the high transaction cost, Colombo Stock Exchange Chairman (CSE) Vajira Kulatilaka assured that much was being done by the regulators to increase liquidity levels. However, he dismissed the notion that Sri Lanka has high transaction costs.
“On the transaction cost, it is debatable. There are no taxes on capital gain and in that case the transaction cost is lower compared to any other countries. The trend is that it has come down. We can’t just open up as there will be other repercussions on the market,” he said at the panel discussion, which also featured Securities and Exchange Commission (SEC) Chairman Dr. Nalaka Godahewa and Central Bank Deputy Governor Ananda Silva.
Regarding the possible impacts on the local stock market due to an increase in interest rates in the US, Deputy Governor Silva admitted that while Sri Lanka could be hit, the situation would be manageable.
“Our country is open, so there will be some impact. Since we have built certain buffers and have strengthened our reserves, we should be able to manage it. However, if there is a sudden increase, some investors might pull out; but then, if you look at the growth of the country and its prospects, there are opportunities to invest in Sri Lanka,” expressed Silva.
www.ft.lk
During an interactive panel discussion at the Capital Market Conference 2014, potential investors sought clarification from the regulators themselves on areas such as availability of liquidity, transaction costs and probable impacts on Sri Lanka due to interest rates increase in the US.
While investors pointed out that challenges observed by them in the local capital market are the “sheer lack of liquidity” and the high transaction cost, Colombo Stock Exchange Chairman (CSE) Vajira Kulatilaka assured that much was being done by the regulators to increase liquidity levels. However, he dismissed the notion that Sri Lanka has high transaction costs.
“On the transaction cost, it is debatable. There are no taxes on capital gain and in that case the transaction cost is lower compared to any other countries. The trend is that it has come down. We can’t just open up as there will be other repercussions on the market,” he said at the panel discussion, which also featured Securities and Exchange Commission (SEC) Chairman Dr. Nalaka Godahewa and Central Bank Deputy Governor Ananda Silva.
Regarding the possible impacts on the local stock market due to an increase in interest rates in the US, Deputy Governor Silva admitted that while Sri Lanka could be hit, the situation would be manageable.
“Our country is open, so there will be some impact. Since we have built certain buffers and have strengthened our reserves, we should be able to manage it. However, if there is a sudden increase, some investors might pull out; but then, if you look at the growth of the country and its prospects, there are opportunities to invest in Sri Lanka,” expressed Silva.
www.ft.lk
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