SL draws most interest among frontier markets: Asia’s No. 1 stock broker

• Hong Kong-based CLSA turns bullish on Sri Lanka

• Takes 25% equity stake in CT Smith Holdings in strategic deal; first of its kind for CLSA in frontier markets that includes Vietnam, Pakistan and Bangladesh

• Move a big boost for capital market and to lure more foreign portfolio investments; CLSA and CT to benefit from combined product and service offerings

• CLSA’s COO says improved liquidity and governance will draw more investments

• CT Smith Holdings goes for re-branding adding CLSA names in to capital market companies

Asia’s number one stock broker, the Hong Kong-headquartered CLSA (Credit Lyonnais Securities Asia), yesterday entered the Sri Lankan market with a strategic deal with CT Smith Holdings, saying the country is the most sought after frontier market in the region for global investors.

“In Asia frontier markets are Vietnam, Sri Lanka, Pakistan and Bangladesh. Within these markets, Sri Lanka has the most interest among our customer base,” CLSA Global Chief Operating Officer Donald Skinner told journalists in Colombo following the strategic deal with CT Smith Holdings Ltd., inclusive of a 25% stake in the company with an investment of $ 2 million. “Overall the demand for frontier market is on the up and Sri Lanka is also the easiest for foreign investors,” he said adding that Colombo is the first within Asian frontier markets to see CLSA’s direct equity presence. In other markets CLSA operates via brokers.

CLSA has brought in 70% of CT Smith Holdings’ foreign business as the latter’s broking arm is responsible for the largest foreign inflow to the Colombo stock market.
“Our strategic partnership makes sense and we hope to build the business further together and bring foreign investment in to Sri Lankan equity thereby help more companies,” Skinner said.

He also noted that improved liquidity in the CSE as well as good corporate governance will help boost foreign inflows.

Leading and oldest independent brokerage and investment group CLSA is Asia’s leading and longest-running independent brokerage and investment group. It has over 1,500 dedicated professionals located in 21 locations across Asia-Pacific, as well as Europe and the USA. CLSA’s parent company is CITIC Securities, one of Asia’s leading investment banks.

CLSA was voted Best Overall Brokerage in Asia (ex-Australia and Japan) for Combined Research and Sales in 2007-13 (except 2011) and Most Independent Research Brokerage for the past 12 years in the annual Asiamoney Broker’s Poll (except 2005). CLSA was also ranked No. 1 for equity strategy in Institutional Investor’s All-Asia Research Poll between 2003 and 2012 (except 2006 and 2010).

The investment in CT Smith is via CLSA’s Singapore Holdings Pte Ltd.

The two companies said the investment cements a long-standing, twenty-year partnership between the two groups and marks the beginning of a new chapter in the development of CT Smith Holdings as a client centric brokerage, investment banking and asset management group with a strong reputation for integrity and independence in Sri Lanka’s capital market.

In a statement CLSA’s Chairman and CEO Jonathan Slone said: “Having worked with CT Smith over many years, we are extremely confident this investment will provide our clients enhanced access to a dynamic, growing frontier market while expanding CLSA’s Asia market research and distribution footprint.”

Cecilia Muttukumaru, Chairperson, CT Smith Stockbrokers, CT Capital and Comtrust Asset Management commented: “CT Smith Holdings and CLSA have developed a strong relationship over the years through CLSA being a counterparty of CT Smith Stockbrokers. 

I am pleased with their decision to further strengthen our relationship. Both groups are renowned for the quality and independence of their products and the partnership will assist CT Smith Holdings to expand its already strong relationship with foreign institutional investors and deliver an enhanced service offering to its domestic clientele.”

Combined product and service offerings CLSA and CT Smith Holdings will benefit from combined product and service offerings particularly in relation to equity research, execution and capital markets advisory in Sri Lanka.

Both groups have agreed in principal to combine research and Equity Capital Markets capabilities as follows:

Economic and Equity Research: CLSA will distribute research products published by CT Smith Stockbrokers, which provide an independent, on-the-ground perspective into the Sri Lankan market. The research products of CT Smith Stockbrokers will be re-branded under “CT CLSA” once approvals are granted. In addition, CT Smith Stockbrokers will participate in CLSA’s Investor Forums which have set the benchmark for equity investor conferences globally.

Equity Capital Markets: CLSA Capital Markets Ltd. and CT Capital will join forces to capitalise on their combined strengths in client relationships, execution and global/local market insights and placement capability.

As a result of the investment by CLSA, CT Smith Holdings Ltd. will change its corporate identity to CT CLSA Holdings Ltd. CT Smith Stockbrokers Ltd. and CT Capital Ltd. will change their corporate identities to CT CLSA Securities Ltd. and CT CLSA Capital Ltd. respectively.

CT Smith Group entity Comtrust Asset Management Ltd. however will retain its current identity as a flagship unit trust management company in Sri Lanka.

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