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Sunday September 24th, 2023

Romesh Gomez on the Consistency of Wealth Trust Securities

Romesh Gomez, Managing Director at Wealth Trust Securities

Rooted in core values, the primary dealer prioritizes customers first, operates with integrity, and fosters innovation, enabling to consistently drive value and profitability.

Romesh Gomez, Managing Director at Wealth Trust Securities, one of the largest non-bank primary dealers in Sri Lanka, discusses his outlook for the economy and emerging investment opportunities, sharing insights into how Wealth Trust’s strong team-centric philosophy and investment in growth have enabled consistent profits and substantial growth even amid market fluctuations.


What is your outlook for the economy after the post-IMF policy changes, the rollout of the IMF programme and the unfolding debt-restructuring discussions?

I am optimistic about the prospects ahead. The shadow cast by the economic turmoil we endured has dissipated, thanks to the corrective measures implemented by the government and relevant authorities that have effectively stabilized the economy.

Presently, our primary challenge revolves around finalizing the restructuring of both domestic and foreign debts. This pivotal step holds the promise of securing additional concessional funding for Sri Lanka from international multilateral agencies. This effort is also poised to trigger several positive developments: a notable increase in portfolio inflows to both the government securities market and the stock market; facilitated acceleration of Foreign Direct Investment (FDI) inflows; and, a significant push towards the essential privatization of underperforming State-Owned Enterprises (SOEs).

Looking ahead, post-debt restructuring, Sri Lanka will shed its status as a defaulting nation. This achievement will reauthorize our access to the international markets for commercial borrowing, should the need arise. In light of this, the future appears promising. I earnestly hope that the government and pertinent authorities are steadfast in their commitment to
successfully navigate this IMF programme to fruition.

How optimistic are you about Sri Lanka’s ability to stabilize the economy and turn things around?

We hold a highly positive outlook here at Wealth Trust. When we reflect on our situation a year and a half ago and compare it to the present, the recovery achieved is truly remarkable. Our past was marked by political instability, interest rates exceeding 30%, the rupee’s value at 360/370 levels, and supply chain paralysis. The outlook then was quite bleak. To have progressed from that point to
where we stand now speaks volumes about the substantial headway we’ve accomplished.

Interest rates have now fallen below 18%, and the rupee maintains stability, while the country operates under a sense of normalcy. As mentioned earlier, the corrective measures have effectively brought stability to our economy. Our focus must now shift towards fostering growth and ensuring its continuity. A resurgence in economic activity is of paramount importance to achieve positive growth figures in the mid-single-digit range. Essential to this endeavour are foundational economic principles such as a low-interest-rate environment, a stabilized exchange rate, and unwavering
consistency in investment policies. However, it’s crucial to exercise caution at this juncture. While the progress in our recovery thus far has been significant, a substantial amount of work remains ahead. I’d like to reiterate the critical nature of adhering to the reform programme we’ve embarked upon and this is critical to propelling ourselves into a phase of prosperity that benefits all citizens of Sri Lanka.

Can you discuss the bond market opportunity and emerging equities opportunities as the economy recovers, and how Wealth Trust can help its clients discover value?

The bond market’s robust 18-month upswing, marked by historical trading returns, is projected to continue positively for another six months. Interest rates have significantly dropped from 30%
peaks to 18%, with the potential for further reduction in line with the Central Bank’s easing cycle. Anticipating sustained single-digit inflation and a shift to mid-single-digit levels will be favourable to a low-interest-rate environment, offering room for further rate easing. At Wealth Trust, our dynamic trading philosophy strategically positions clients to benefit from these trends.

Our insights decode the Treasury bill and bond market mechanics while uncovering core drivers. Research-based forecasts, fortified by a two-decade historical database, guide us. Adept dealers and portfolio managers add a street-smart edge, empowering clients and yield curve strategies identifying value across durations, and precise entry/exit strategies boost liquidity and returns.

Additionally, we offer leverage trading on existing portfolios, amplifying returns. Low interest rates foster equity market momentum, supported by appealing valuations. Anticipating an economic upswing in the second half of 2023, better corporate earnings lie ahead. Amid these factors, the stock market’s prospects are compelling.

Our decade-long consistent profits differentiate us—unique amid competitor fluctuations. This is bolstered by our dedicated team, a key asset. Investment in their growth, industry expertise,
and experience reflect our success. Despite entering as a newcomer with an Rs330 million startup, our 12-year growth is exceptional, multiplying shareholder value by 21 times.

Rooted in core values, we prioritize customers first, operate with integrity, foster innovative investment solutions, and unite in unanimity. Our team-centric ethos spurs collaboration and shared success. This approach ensures we’re prepared for a changing environment, underpinned by clear communication and transformational leadership. As we envision change, our behaviour and
attitude lead the way.

Can you elaborate on your approach to leadership and the strategies you have implemented to drive this transformation?

How do these initiatives align with the changing dynamics of the economy? My leadership strategy centres on empowering employees to take ownership while assuring them of unwavering support. Our open-door culture at Wealth Trust fosters an environment where opinions are freely expressed. This strength facilitates valuable feedback collection, fuelling performance enhancements.
Over time, this approach instils profound ownership within the team. Regardless of hierarchy, each member feels their contribution impacts overall performance, boosting loyalty and dedication.

I firmly uphold “You are as good as your team,” valuing unity’s brilliance. This philosophy aligns with navigating business fluctuations, fostering transparent communication that heralds change. Transformational leadership inspires the team’s embrace of change and personal growth.

Leaders must exemplify sought change via behaviour and attitude. Effective leadership drives an environment primed for growth and success.