ASPI records growth of 10.5%: Market turnover highest since 2011 | Daily News
2020: A turnaround year for Sri Lankan Stock Market :

ASPI records growth of 10.5%: Market turnover highest since 2011

CSE Chairman Dumith Fernando
CSE Chairman Dumith Fernando

The Sri Lankan stock market ended 2020 on a positive note yesterday, marking a year in which the Colombo Stock Exchange (CSE) has seen indices indicate noteworthy resilience and attract record-breaking levels of trading activity.

The benchmar kAll share Price Index (ASPI) closed 2020 recording a growth of 10.5%, the highest annual increase the index has seen since 2014 and only the 12th occasion the index has seen a double digit percentage growth in CSE’s 35 year history. The ASPI ended 2020 on 6774.22 points. Sri Lanka’s ASPI was also recorded as the best performing stock market index for the month of September 2020, with the index recording a remarkable12% growth during the month.

The ASPI on May 12, 2020 recorded its lowest point in over a decade but recovered from this to post a 59% gain by the end of the year.Although the S&P SL20 index, which features the CSE’s 20 largest and most liquid stocks has declined by 10.1% in 2020, the index has recovered substantially indicating a trend similar to the ASPI with 57%growth since May 12, closing at 2638.10 points as of December 31 2020.

The overall value of the stock market, which is represented by the Market capitalization, has also improved adding Rs. 109 billion during 2020 and more substantially by Rs. 983 billion since May 12. The market recorded a daily average turnover of Rs. 1.9 billion, this daily average turnover is the highest recorded for a year since 2011. The total turnover for the yearwas Rs. 397 billion which was also the highest since 2011.

Overall market activity in terms of the average number of trades carried out during a trading day also increased significantly, ending double the average figure recorded in 2019 and triple the figure recordedin 2018.This indicates high investor participation.

A significant increase in CDS account openings was observed in 2020 with 17,600 new investors entering the market which is 70% higher than the number of new investors in 2019 and 56% higher than 2018. Local investors have contributed to approx. 79% of the total market turnover in 2020 which is higher when compared to approx. 63% in 2019 and 55% the year prior to that.

The year 2020 has also seen a greater interest among younger investors in the retail segment, with 46% of the total accounts opened being attributed to the 18-30 age group. This marks an interesting development considering the fact that a large portion of retail stock market investors have traditionally been above 50 years of age.

On the foreign investment front, 2020 has recorded a net foreign outflow of Rs. 51 Billion, largely in line with the foreign fund outflow trend recorded in emerging and frontier markets.However it is noteworthy that Sri Lankan equities attracted purchases worth Rs. 53 billion during 2020 by foreign investors, ending close to the Rs. 56 billion figure recorded in 2019.

The Digitalization drive of the Sri Lankan stock market which was implemented in 2020 has enabled end-to-end connectivity electronically at all stakeholder touchpoints and was implemented as an industry-wide exercise.

During the year CSE also expanded the eligibility criteria for initial listing of shares on the Main Board and the DiriSavi Board to enable a wider spectrum of companies to qualify for a listing.

CSE Chairman Dumith Fernando Said “In 2021, major market infrastructure developments, Product Diversification, widening of the investor base, building a sustainable business model and more importantly working with the Government and the regulator to position the CSE as a pivotal point for capital raising are all on the cards.Increasing the number of companies listed on the exchange is one of the CSE’s key strategic objectives and we are making steady progress on this front.”

“We believe the new SEC Act will be an important development covering regulatory changes required for continuing to safeguard investor rights, enabling the de-mutualization of the CSE, facilitating new product development and strengthening the effectiveness of market regulation.”