In a year that has proved to be record breaking, the Colombo Stock Exchange (CSE) has reached yet another milestone in 2014 by recording it’s highest-ever inflow of foreign investment into the equity secondary market. Foreign purchases in 2014 as at November 14 is Rs. 95,083.8 Million surpassing the previous highest foreign purchases of Rs.92, 425.5 million recorded in 2010.
The CSE in association with the Securities and Exchange Commission (SEC) initiated a strategy to attract foreign investors to the market, over the past two years. The strategy to conduct road shows in overseas locations has been successful in attracting foreign institutional investors to invest in the Lankan Capital Market. These Forums have generated wide interest amongst international Fund managers and generated tangible results in the form of investments in equity and debt.
The “Invest Sri Lanka” Investor Forums were held in Mumbai, Dubai, Hong Kong, Singapore, London and New York and the purchases originating from these countries account for 60.3 per-cent of overall foreign purchases within 2014. The CSE also attracted new foreign entrants to the market, in 2014, from locations where these Investor Forums were hosted and they accounted for 44.4%.
“The market has been on an upward trajectory in the past year and this has been a steady progressive improvement. We believe that investors entering the market are being cautious and basing their decisions on the fundamentals of companies. Foreign investors therefore have confidence in the liquidity of their investments, this buoyancy is being reflected in the foreign inflow over the past months,” CSE Chairman Vajira Kulatilaka said.
“The Capital Market Conference hosted in October of this year was a culmination of several overseas Investor Forums, over the past two years. It is evident from the institutional and high-net worth investors who visited Sri Lanka and met with listed companies, during the conference, that the Sri Lankan Capital Market is gaining attention and proving to be an attractive investment destination for those looking at emerging and frontier markets,” CSE CEO Rajeeva Bandaranaike said.
The net foreign flow from each of the countries, where foreign investor forums were held, have shown a positive increase and new investors have been attracted to the market from each location, as demonstrated in the graphs below.
Net Foreign flow from India has increased to Rs. 242.5 million in the period January to October 2014 ( graph 1), after recording a negative foreign flow in 2013, with a large percentage of this inflow being contributed by new entrants to the market.