PUBLIC

MediaRelease
14
th
July2014

Stock Market buoyant

CSE and SEC targets local and foreign investors Niroshan
Wijesundere

As the Sri Lankan economy takes an upward turn, with
economic growth being at 7.5 per-cent over the past four years,
macroeconomic indicators signal an ideal environment for investment,
with bank interest rates at an all-time low, the investment atmosphere
is idyllic for prudent and well informed investors.

It is important to understand the long term nature of
capital market investment and the cyclical flow that it follows. If
one looks at the indices right now, one is able to see the positive
growth trajectory of the market. The ASPI has crossed the 6600
point mark and the S&P SL20 was recently at the highest since its
launch, indicating that the stock market is now on an upward turn
based on valuations and fundamentals, CSEs Head of Market
Development Mr. Niroshan Wijesundere said.

Taking into account this ideal investment environment, the
Colombo Stock Exchange (CSE) along with the Securities and
Exchange Commission (SEC) and other stakeholders, have taken
strident steps to develop the capital market, with a new strategic direction adopted since
2012. Under the CSEs three year strategic plan and the SECs ten point plan, the CSE
has embarked on a steady phase of growth and these efforts are now coming into fruition.
The CSE and SEC has taken bold and innovative efforts to reach out to attract foreign
investors, make information more freely available and educate investors.

The past two years have seen a number of significant achievements:

The CSE in association with the SEC began a concentrated effort to attract
institutional and high net-worth investors from across the globe by projecting the CSE as
an attractive emerging market. Under the banner of the Invest Sri Lanka Investor
2012 Highest Net Foreign inflow Rs. 38,660. 7 Mn
2013 Highest capital raised through Debt IPOs Rs. 68, 262.3 Mn
2014
(J an to
J une)
Highest capital raised through equity IPOs
(since 2011)
Rs. 2,393.8 Mn
The Colombo stock
market offers good
value and i s now
consi der ed a
favori te market
among i nsti tuti onal
i nvestors looki ng to
i nvest i n fr onti er
markets.

PUBLIC

Forums were held in Mumbai, Dubai, Hong Kong, Singapore and London over the course
of 2013 and 2014.

Presentations were made by high-level government and financial sector
representatives, who made strong cases for investing in the Sri Lankan capital market,
during these investor forums. Since the beginning of these international forums, there has
been a steady stream of new foreign entrants to the market and renewed interest from
existing investors which has increased the foreign purchases and net foreign inflows.

By correlating the timing of our investor forums with the
inflows that have been generated from the respective countries where
these forums were held, we are able to directly see the constructive
nature of these forums for the Stock Market in Sri Lanka. Our
greatest success has certainly been from Singapore, we have
observed a net foreign inflow of Rs. 7,617.4 Mn in the first six
months of 2014, as opposed to a net foreign outflow of Rs. 2,054.4
Mn in 2013 (Graph 1) . In Hong Kong we saw a net foreign outflow
of Rs. 175 Mn in 2013 and a net foreign inflow of Rs. 1.7 Mn in
2014 (Graph 2), Mr. Wijesundere said.

Graph 1

Continued
Graph 2
(2,054.4)
7,617.4
(4,000.0)
(2,000.0)

2,000.0
4,000.0
6,000.0
8,000.0
10,000.0
2013 2014(JanJune)
Rs.Mn
NetForeignFlow(Rs.Mn)
Singapore
Our greatest success,
has certai nly been from
Si ngapore, we have
observed a net forei gn
i nflow of Rs. 7,617.4 Mn
i n the fi rst si x months of
2014, as opposed to a net
forei gn outflow of Rs.
2,054.4 Mn i n 2013.
4,019.5
2,150.9
6,337.5
Singapore
2013
2014(JanJune)
fromExisting
Investors
2014(JanJune)
fromNew
Investors
ForeignPurchases (Rs.Mn)
Singapore
4.4
12.9

HongKong
2013
2014(JanJune)
fromExisting
Investors
2014(JanJune)
fromNew
Investors
ForeignPurchases (Rs.Mn) Hong
Kong
(175.0)
1.7
(200.0)
(150.0)
(100.0)
(50.0)

50.0
2013 2014(JanJune)
Rs.Mn
NetForeignFlow(Rs.Mn)
HongKong

PUBLIC




Even in the case of the United Arab Emirates, where UAE markets were picking
up at the time of our conference; we were able to portray the Sri Lankan capital market as
an attractive investment avenue, which had growth potential. We have seen an
improvement from a net foreign outflow of Rs. 134.9 Mn in 2013 to a net foreign inflow
of Rs. 29.9 Mn in the first six months of 2014 (Graph 3). Since the event in Mumbai, we
have seen a net foreign flow from India improve from a net foreign outflow of Rs. 106.7
Mn in 2013 to a net foreign inflow of Rs. 30.8 Mn in 2013 (Graph 4), Mr. Wijesundere
said.

Graph 3

Graph 4

This joint effort between the CSE and the SEC has also resulted in a number of
new entrants to the market with 31 new accounts being opened from the locations where
the investor forums were held. Additionally purchases from the countries where investor
forums were held has increased significantly.

24.5
90.7
12.8
UAE
2013
2014(JanJune)
fromExisting
Investors
2014(JanJune)
fromNew
Investors
ForeignPurchases (Rs.Mn) UAE
(134.9)
29.9
(150.0)
(100.0)
(50.0)

50.0
2013 2014(JanJune)
Rs.Mn
NetForeignFlow(Rs.Mn)
UAE
67.3
47.3
11.8
India
2013
2014(JanJune)
fromExisting
Investors
ForeignPurchases (Rs.Mn) India
(106.7)
30.8
(150.0)
(100.0)
(50.0)

50.0
2013 2014(JanJune)
Rs.Mn
NetForeignFlow(Rs.Mn)
India

PUBLIC

These forums are a joint effort which brings together a number of the
stakeholders within the capital market, from brokers, to custodian banks and the market
regulator, their input has been vital to the success of the conferences and the positive
outcomes which they have yielded, Mr. Wijesundere added.

In the past months the CSE has launched a mobile application which provided
vital market information to users across the island and overseas, in all three languages.
The application allows uses to access, a market summary, ASPI and S&P SL20 graph
details, latest trades, announcements, price list, gainers and losers, details of listed
securities and a My Portfolio feature which is a personal watch list.

First launched for Android mobile devices, the
App is now also available for the iOS platform as well
and can be downloaded free of charge from Google Play
and the Apple iTunes store. Since its launch in December
2013 the Android App has had 4736 downloads, whereas
the iOS app, launched just last month has been
downloaded 568 times.

There is a perception among some that stock
market information is available only to a privileged few.
However the CSE is committed to ensure that everyone
has as much information as possible and is able to access
this information regardless of the size of their investment, their location or their language
of fluency. Therefore we take meticulous efforts to ensure information is available at
their fingertips and accessible on the go, Mr. Wijesundere stated.

The CSE is also making a conscious efforts to reach out to a younger more tech-
savvy audience that is interested in monitoring the capital market and keeping abreast of
the promotional activities being conducted therein. In order to provide timely updates to
this potential and existing investor bracket, the CSE launched a twitter handle
(@CSE_Media). Followers, that now number nearly 700, receive updates on
announcements, a market summary and information on CSE awareness building efforts,
amongst other stimulating updates.

In order to improve the financial literacy amongst
potential and existing investors and within this context our
Investor Education Team seeks to educate investors on the
fundamentals of investing, because it is knowledge of these
fundamentals that will assist them to make sound financial
decisions Mr. Wijesundere said.

He further pointed out that the CSE has been engaged in the task of educating
existing and potential investors over the last two years. We have a base of investors well
educated on the fundamentals of investment and this base will now be able to take full
advantage of the market that is posed to grow in the coming months.

The CSE i s commi tted
to ensure that ever yone
has as much
i nformati on as possi ble
and i s able to access thi s
i nformati on regardless
of the si ze of thei r
i nvestment, thei r
locati on or thei r
language of fluency.
There i s a need to
i mprove fi nanci al
li teracy

PUBLIC

The Colombo Stock Exchange together with the Securities and Exchange
Commission of Sri Lanka is endeavoring to educate the general public, existing and
potential investors and students on the fundamentals of the capital market and investing
therein. The Investor Education Team of the CSEs Market Development division, in the
past six months have reached a large number of potential and existing investors (Table 1):

Description
Total
Noofevents NoofParticipants
Schools 150

8,627
University/Highereducation 29

1,564
InvestorAwareness(Direct
Approach) 173 10,151
InvestorAwareness(Other) 27

4,011
Exhibitions 6

4,834
InvestorEducationalWorkshops 8 318
ProfessionalWorkshops 17

1,061
Total 410 30,566

We identify specific segments and educate them on financial planning. Due to a

perceived risk of investing in the Stock Market some are disinclined to invest in the
capital market. Our aim is to portray the CSE as an alternative investment option, Mr.
Wijesundere said.
The CSE also conducts intensive, week long, Investor Education
Programmes for existing or potential investors, to give them an in-depth
understanding of the fundamentals of investing. These training workshops
equip attendees with the skills necessary for analyzing investment
opportunities, capital market processes, and benefits of investing in shares and
debt and analysis of listed company financial documents.

These workshops are attended by anyone from students to retired
professionals, who are seeking a thorough understanding of the market in
order to make prudent investment decisions. These workshops encourage
potential and existing investors to learn the basics of analyzing the financial
statements of a company and diversification of investment portfolios which
provide an advantageous return, Mr. Wijesundere stated.

With the improvement of market sentiments, investors must be
mindful to evaluate fundamentals and valuations and make informed investment
decisions. Furthermore they must consider research reports by brokers and seek the
advice of investment professionals, before making investment decisions, Mr.
Wijesundere said.
We i denti fy
speci fi c segments
and educate them
on fi nanci al
planni ng. Due to
a per cei ved r i sk of
i nvesti ng i n the
Stock Market
many are
di si ncli ned to
i nvest i n the
capi tal market.
Our ai m i s to
por tray the CSE

PUBLIC

AboutCSE

TheColomboStockExchange(CSE)operatestheonlysharemarketinSriLankaandis
responsibleforprovidingatransparentandregulatedenvironmentwherecompanies
andinvestorscancometogether.TheCSEisacompanythatislimitedbyguarantee
establishedundertheLawsofSriLanka.TheCSEislicensedbytheSecuritiesand
ExchangeCommissionofSriLanka(SEC)andisamutualexchangeconsistingof15
Membersand15TradingMembers.AllMembersandTradingMembersarelicensedby
theSECtooperateasStockbrokers.Formoreinformation,pleasevisit:www.cse.lk.

Formoreinformation:

NiroshanWijesundere
HeadofMarketDevelopment

ColomboStockExchange
Level4,WestBlock,
WorldTradeCenter,EchelonSquare,
Colombo01.
SriLanka.

Direct+94112356510
Mobile+94777819999
Fax+94112445279