Lanka's capital market to reach a higher plane

Ten-year development plan to be launched in January

Channa Kasturisinghe

MARKET: Sri Lanka will launch a 10 year Capital Market Development Plan next year aiming to elevate the local capital market to the international level by increasing its market size, efficiency and the range of instruments.

This development plan funded by the Asian Development Bank (ADB) will be along the lines of Capital Market Master Plan implemented in Malaysia in 2001 which provided the framework and helped the development of Malaysian capital market.

This ambitious plan which will significantly alter the landscape of the Sri Lankan capital market will be launched in January 2007 following the Government's approval, the Director General of the Securities and Exchange Commission Channa de Silva said.

He said the SEC is planning to set up a special Secretariat soon to facilitate the implementation of the development plan. "It also includes the proposals in the five year corporate plan to develop our capital market which focuses on expanding our market and enhancing corporate government practices," de Silva told the "Daily News" yesterday.

This initiative is also expected to speed up the SEC's efforts to expand the number of listed companies and the products listed on the Colombo Stock Exchange (CSE)which will help to multiply its market capitalisation.

Attracting major players in apparel, IT, manufacturing and SMI sectors to the stock market has been a long felt need.

The introduction of derivatives such as options and futures which allow investors to diversify their portfolios and to hedge their risks would also help boost the market.

The CSE with about 240 listed companies presently has a market capitalization of Rs. 700 million.

A priority objective of the development plan will be to expand the domestic investor base which is about 80 percent of the total turnover of the CSE.

De Silva said the SEC is planning to set up a capital market training institution under this project in order to provide training and awareness to stock brokers, investors and directors of companies.

The SEC Director General who addressed the Commonwealth Business Roundtable Meeting at the Central Bank auditorium on Tuesday said that the proposed development plan has been presented to all the stake holders.

Some stake holders told the "Daily News" that this pioneering effort by the SEC would also improve the competitiveness of the local capital market and would help it to become a leading market base in the South Asian region.

However, they are of the view that the development of the capital market in Sri Lanka should be facilitated by a strong infrastructure and a comprehensive legal, regulatory and administrative framework and a stable macro economic environment.