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Thursday, 21 November 2013 00:00 - - {{hitsCtrl.values.hits}}
The new President of the Colombo Stock Brokers Association (CSBA) is Dihan Dedigama, a longstanding professional in capital markets.
The Colombo Stockbrokers Association is a coterie of regulated brokering firms comprising licensed professionals actively engaged in the myriad dimensions of competencies defined in the areas of stockbroking. It is the apex industry body representing retail and institutional stockbroking firms in Sri Lanka, engaging members, regulators, market participants and stakeholders to strengthen the broking profession.
While protecting and promoting the interests of the members, the CSBA is mandated to promote standards, ethics, values, principles and accountability among the membership, as well as a nurturing of a culture that promotes skills and knowledge among broking professionals. Currently, the CSBA membership stands at 23.
The Daily FT met up with Dedigama to find out the CSBA’s perspective on the state of the Colombo stock market and its future prospects as well as other issues. Here are excerpts:
Q: You were recently elected as the President of CSBA. What are the most urgent issues you plan to address in your agenda?
A: To make sure the market becomes vibrant and regain the confidence and trust of the local investors who for some reason seem to have deserted the market. We need to regain the confidence of all segments of investors and make them understand that by investing in stocks, you can get a better return than bank deposits and can also beat inflation. For many years from early 1990 this was what happened, and we have to change the mindset of investors.
Q: From any angle you may want to look at it, the stock market in Sri Lanka appears dead. Do you foresee a vibrant future in it?
A: My question is, if the market is dead, why are foreigners net buyers in 2012 and 2013 to the tune of 39 b and 24 b year-to-date? They see potential. Even during the 2007 to 2009 period, the locals waited on the sidelines while foreigners picked stocks, during the height of the war they accumulated stocks; once the war ended and the market started running and locals got activated, the foreigners cashed in and took profit. That is why we encourage locals to re-enter the market now and take advantage of the opportunities.
Q: If you say the stock market offers a viable investment option to the general public in the country, how do you plan to promote it in the short to medium term?
A: Change the mindset. The stock market has over the last 11 years (2002 to 2012) given a 33% return with dividends; banks, manufacturing conglomerates, all these sectors did well, why can’t they continue to perform well? I don’t see any reason. We have to change the wrong perceptions about the stock market; we need to regain the confidence of the investors to get them back to invest in the stock market.
Q: 2012 and 2013 to date foreigners have invested heavily while local investors have taken a back seat. Can you comment?
A: As I explained previously, foreign portfolio investment has remained resilient as discerning foreign funds invested a record 39 billion in 2012 and year-to-date 2013 the net inflow is Rs. 24 billion as they continue to see value in the Sri Lanka stock market, whereas local investor sentiments remain lacklustre. Hence building confidence and making locals aware of the opportunities they are missing is very important.
Q: Does the CSBA support the 10-point road map initiated by the SEC? Do you think it will bring forth the intended results?
A: The CSBA is fully supportive of the 10-point road map. In this instance we see a great opportunity for all stakeholders such as the SEC, CSE and the brokers to work together. This may be the first instance the brokering community has built a good rapport with the SEC and a good line of communication has been opened. This will prove productive in the longer run and will definitely help grow the market and for all of us to move in the right direction. I must mention that the CSBA appreciates the healthy dialogue the Chairman of the SEC and CSE have maintained with CSBA in the implementation of the road map.
Q: The CSBA has 23 of the 28 brokerage houses as members. What is your plan for the CSBA in the next 12 months?
A: Work hard to make sure we all are in the CSBA and then work collectively for the betterment of the industry – that’s my goal.
Q: How would you want see the CSBA be an active participant in the ambitious economic drive initiated by the Government?
A: Absolutely, CSBA wants to be catalyst that provides the capital required to develop the country. Many countries are where they are today because of the foresight to develop infrastructure first, the rest will happen. We have to be realistic; the war finished just four years ago, we cannot expect to be like Malaysia or Indonesia in such a small timespan.
As Ruchir Sharma, of Morgan Stanley Investment Management said, Sri Lanka now has the opportunity to grow fast and become a ‘Breakout Nation’. I think the benefits of the current policies will bear fruit in the future. We all have to make a conscious effort to promote Sri Lanka as a promising investment destination.
