By Hiran H.Senewiratne
Sri Lankan capital market has great potential to grow and has as a lot of catching up to do when compared to our regional peers, new president of the Colombo Stock Brokers Association (CSBA) Ravi Abeysuriya said.
"The listed corporates should further improve on governance aspects to attract savvy investors to participate in the growth of their companies, rather than depend on only bank borrowings, Abeysuriya told The Island Financial Review.
He said market intermediaries, such as the stock broking firms and asset managers need to take greater responsibility to ensure a larger number of our population who hitherto are not benefiting from our market directly or indirectly, to participate in our capital market.
"Our industry is at a crossroads, largely because investors no longer see the value the industry brings to society and only a meaningful change can restore that trust, he said.
"When investors do not trust the stock market, they are unlikely to save and invest for their future and achieve their long term financial goals. The problem is not the Colombo Stock Exchange (CSE); rather it is the minority of people who have aided to cut corners and incorrectly advised clients on reckless practices when trading for short term gain, Abeysuriya said.
"Sri Lanka is one of the fastest aging countries in the world. There will be a massive social impact to Sri Lanka in the not too distant future unless they start investing. People will have lower quality of life and may have to work longer and will have intergenerational stress, Abeysuriya said.
"To restore trust, we need a shift towards greater integrity and accountability.
"We need a stronger and systematic ethical dimension. Getting back on the right path requires education and leadership that is sustained over many years. Most importantly, it requires investors and financial leaders who take ‘values’ as seriously as ‘valuation’ and ‘culture’ as seriously as ‘capital, he explained.
CSE is under-owned versus other frontier market peers and as a result people in Sri Lanka miss out on the ‘power of investing’, particularly to build long term savings for retirement, he said.
The long term institutional funds, such as, provident funds, insurance companies and Unit Trusts collectively own only 6.5 percent of the Rs 3.1 trillion stock market capitalization. Similarly, only 6 percent of Rs 133 billion assets under management of Unit Trusts is in pure equity funds in Sri Lanka and only about 25,000 credit default swap accounts are active, Abeysuriya added.
The stock market offers the means to participate as an owner in the growth of the companies that make up the Sri Lankan economy, he said.
"Investing calls for optimism about future opportunities. It requires investing wisely, taking a reasonable amount of risk and a long-term view and most importantly, getting professional help, Abeysuriya said.
The CSBA is an apex industry body, representing the stock broking companies, licensed and regulated by the Securities and Exchange Commission of Sri Lanka.
Sri Lankan capital market has great potential to grow and has as a lot of catching up to do when compared to our regional peers, new president of the Colombo Stock Brokers Association (CSBA) Ravi Abeysuriya said.
"The listed corporates should further improve on governance aspects to attract savvy investors to participate in the growth of their companies, rather than depend on only bank borrowings, Abeysuriya told The Island Financial Review.
He said market intermediaries, such as the stock broking firms and asset managers need to take greater responsibility to ensure a larger number of our population who hitherto are not benefiting from our market directly or indirectly, to participate in our capital market.
"Our industry is at a crossroads, largely because investors no longer see the value the industry brings to society and only a meaningful change can restore that trust, he said.
"When investors do not trust the stock market, they are unlikely to save and invest for their future and achieve their long term financial goals. The problem is not the Colombo Stock Exchange (CSE); rather it is the minority of people who have aided to cut corners and incorrectly advised clients on reckless practices when trading for short term gain, Abeysuriya said.
"Sri Lanka is one of the fastest aging countries in the world. There will be a massive social impact to Sri Lanka in the not too distant future unless they start investing. People will have lower quality of life and may have to work longer and will have intergenerational stress, Abeysuriya said.
"To restore trust, we need a shift towards greater integrity and accountability.
"We need a stronger and systematic ethical dimension. Getting back on the right path requires education and leadership that is sustained over many years. Most importantly, it requires investors and financial leaders who take ‘values’ as seriously as ‘valuation’ and ‘culture’ as seriously as ‘capital, he explained.
CSE is under-owned versus other frontier market peers and as a result people in Sri Lanka miss out on the ‘power of investing’, particularly to build long term savings for retirement, he said.
The long term institutional funds, such as, provident funds, insurance companies and Unit Trusts collectively own only 6.5 percent of the Rs 3.1 trillion stock market capitalization. Similarly, only 6 percent of Rs 133 billion assets under management of Unit Trusts is in pure equity funds in Sri Lanka and only about 25,000 credit default swap accounts are active, Abeysuriya added.
The stock market offers the means to participate as an owner in the growth of the companies that make up the Sri Lankan economy, he said.
"Investing calls for optimism about future opportunities. It requires investing wisely, taking a reasonable amount of risk and a long-term view and most importantly, getting professional help, Abeysuriya said.
The CSBA is an apex industry body, representing the stock broking companies, licensed and regulated by the Securities and Exchange Commission of Sri Lanka.
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