Sri Lanka SEC welcomes stock surge, calls for informed decision-making

ECONOMYNEXT – Sri Lanka’s Securities and Exchange Commission has welcomed a surge in the Colombo Stock Exchange making it one of the best performing markets in the world but called for informed decision making.

“The SEC through its social media platforms has educated investors on different aspects of investing and the need to make an informed investment decision,” the regulator said.

“With the view of protecting investors, the SEC has highlighted the importance of following the official channels of the SEC and the CSE and other accredited investment advisors in making decisions to invest in the stock market.

“The SEC has also uploaded a list of Registered Investment Advisers (RIAs) attached to Stock Broker Firms on its website

“Steps have also been taken to enlighten the investors on prohibited conduct in order to ensure that they stay away from conduct that would amount to market offences.”

The Coronavirus pandemic had prevented the SEC from conducting its educational programs physically and has been using social media in addition to print and electronic media.

“The SEC launched its own social media platform with a Facebook Page, Twitter Account and a YouTube Channel in mid last year attracting a large viewer base,” the regulator said.

“The SEC realized the need to step in and offer proper guidance to new investors since not all content appearing in the social media was conducive towards creating awareness and guidance to them.

“The SEC through its social media platforms has educated investors on different aspects of investing and the need to make an informed investment decision.”

On January 15, there had been 61,772 trades were driving the CSE index by 291 points and turnover to 12.4 billion rupees. Market Capitalization was 3.38 trillion rupees.

Over the past eight months the CSE All Share Index had risen 75 percent, and the S&P SL 20 Index had surged 65 percent since May.

The ASPI of the CSE has recorded a significant growth of 75% during the last 8 months. The Blue-Chip S&P SL 20 Index has surged by almost 65% sinceMay 2020.

The average daily turnover so far in 2021 was 7.94 billion rupees compared to 1.8 billion in 2020. In 2019 it was only 711 million.

“This phenomenal performance of the CSE indicates the strong confidence the investors have on the Market,” the SEC said.

“It is heartening to note that local investors have stepped in at a time when there has been a foreign outflow and their contribution amounted to 80 percent of the total market turnover in 2020.”

“There have been several contributory factors to this unprecedented performance of the stock market and main amongst them was the slashing of Bank interest rates by the Central Bank of Sri Lanka last year.

“The stock market has become the preferred choice of a large number of investors due to this prevailing low interest rate regime.

“Political stability coupled with progressive steps taken by the government to develop the capital market too has had its positive effects.

“The creation of a State Ministry for Capital markets in August of last year as well as the salutary proposals introduced by the November Budget aimed at providing relief to the stakeholders of the capital market are noteworthy signals sent out by the government to demonstrate its commitment.”

“Truly humbled by the confidence displayed by investors in our economy,” State Minister for Money and Capital Markets, Nivard Cabraal said in a twitter message last week.

The digitization initiative had also helped bring new investors the SEC said.

“The ease with which one could open an account and start trading has resulted in the opening of a large number of CDS accounts online during the past few months,” the SEC said.

“Out of the total number of new accounts opened by resident individuals during the period September – December 2020, 92% have been opened online through the Mobile App.”

Under a second phase of digitalization by March, opening process of company accounts and foreign accounts, will be decentralized. A smart wallet would be introduced and an E portal where clients can directly access and view their accounts will be available. (Colombo/Jan16/2020)

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  1. There are still the fraudsters of the previous stock market fiasco, who have not been charged , and are free to roam and are active. All these members should have been suspended from participation by now.

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