The Colombo Stock Exchange (CSE) will launch a Multi-Currency Board some time next year which will enable overseas companies to list here and raise capital in US dollars, a CSE official said.
‘The CSE is currently working with regulator to obtain necessary approvals, including legal and non legal clearance in order to launch next year, the official told the Island Financial Review.
“The CSE wanted to introduce this system this year but due to unavoidable circumstances it got delayed. We hope it can be launched by next year the most, the official added.
The official said: ‘Current market scenario has created opportunities for investors to buy stocks at relatively low prices. The market is at very cheap multiples. Therefore, once the system is in place we will market in other countries to invest in US dollar.
‘According to market sources this is not the time to sell; this is the ideal time to purchase shares. Compared to the local investor base, the international investors have identified potential opportunities in our stocks. We are hoping that local investors will avail themselves of this opportunity of buying stocks at relatively cheap prices.
‘In addition, a sizeable public holding is a necessity for a transparent and liquid market. Various rules and regulations have been introduced to address the liquidity issue in the capital market. The CSE has introduced minimum public norms and enforcement rules. We’re sort of pushing companies to increase their public float to increase the liquidity in the market.
‘Therefore, a minimum public holding as a continuous listing requirement is introduced with the aim of promoting a liquid and transparent market with a better price discovery mechanism.
‘The global economy has come under severe stress and at the same time growth of Sri Lankan economy has slowed down due to various factors.
“It is important that we also drive the local investor; so that we can cushion the impact of foreign investors when they exit the market. Unfortunately, our local institutions are not that active.
‘At present, the market has subsided due to lack of local investor participation; it is the foreigners who have been active even during the last year and even up to now. It is very important that our local institutions, the private sector, high net worth investors and retailers get active in the market now, to sustain market growth.’