The bourse has a new boss. Veteran investment banker Ray Abeywardena was appointed as the new Chairman of the Colombo Stock Exchange (CSE) effective May 2 succeeding Vajira Kulatilake. Abeywardena will serve in his new capacity for the next three years which could be deemed pivotal given the government’s vision to promote Sri Lanka as an investment hub in the region. The Nation spoke to the new Chairman to gauge his vision for the market. Below are the excerpts of the interview:
Q: Tell us a bit about yourself and your journey so far.
I started my career in 1986 at Forbes and Walker in the share department as a trainee stockbroker. In 1992 I was appointed a manager. I progressed thereon to be a director and then the Managing Director.
In 2001, I joined DFCC Stockbrokers; I was in fact instrumental in setting it up as the Chief Executive Officer (CEO). In 2008 we started Acuity as a joint venture of the DFCC Bank and Hatton National Bank where again I was appointed the CEO. This is where I work currently. Acuity is equally owned by the two said companies and we offer an assortment of investment banking products that include corporate banking, stock brokering, fund management, asset management and we currently jointly manage three unit trusts.
I was appointed to the board of the CSE in 2013.
Q: In general, do you think there is a culture of investing among Sri Lankans?
In general, Sri Lankans tend to be very conservative with their choices in relation to money. Most opt to take the uncomplicated route of depositing their money in Current and Savings accounts. Then there’s a segment slightly above that who invest in treasury bills and fixed deposits. If you look at it from that spectrum, other options give you a better guarantee of return for the money you invest whereas shares are risky because they can go either way. All in all, the culture here is rather conservative.
Q: What are your priorities about the market right now? Have you identified any areas or issues that require immediate attention?
As you know the market was down in the last two years. We went through a difficult phase, but fortunately it took a turn for the better in April and over the last 6-7 weeks the indexes have been going up steadily. The market has gone up by about 700 points, the turnovers have increased and overall foreign investments have been significant. We have seen a positive sentiment since April.
I have a couple of tasks to fulfill and one of them would be to get the daily turnover up because it is low in comparison to other markets. Market capitalization has to increase, we need to encourage new listings.
Q: What is the market doing to increase the turnover?
To increase the turnover we need to broad base ownership. We need to attract more investors to the market. For that we need to continue with our foreign road shows. The one we had in Australia is what actually gave the much needed impetus to the market. We are looking at having road shows in London, Singapore and New York in the coming months. We are also looking at the possibilities of targeting China and the Middle East.
Q: Is now a good time to list?
There is no such thing as a ‘good time’ to list. Companies will look at higher valuations. They will look at getting a better price for the shares when they come into the market. But apart from that there’s no specific time for them to come in. By listing there are so many benefits that a company gets – good governance improves, you get better recognition and the mandatory audits give better disclosure and transparency.
Q: Since we’re on the topic of good governance and transparency, recently the President stated that he wanted the South Asian Institute of Technology and Medicine (SAITM) to be listed in the CSE. What is the progress with that?
I don’t know if the stock exchange has been informed, but to date there’s not been any initiation in that regard. Nobody has approached us from the SAITM as yet. I also read about it in the newspapers.
Q: We hear that the CSE is demutualizing. What is the status of that?
It is actually a complicated process. First the SEC Act has to be passed in Parliament and then there’s the Demutualization Bill which also has to pass in order for us to go through with it. What we will do is that we will list and demutualize and by virtue of that the ownership of the market will be broad-based, thereby allowing members who’ve been shareholders for the last thirty years to actually own the market and benefit from it financially.
Q: Is the government doing their part as a stakeholder to make the market better? Is the government doing enough and are they doing the right things?
We are looking forward to the support of the government. The government can actually start by listing State Owned Enterprises like the Lanka Hospitals, the Grand Oriental Hotel, the Hyatt etc. They’ve been spoken of, but nothing has happened so far.
Q: What message do you have for the investors as the new Chairman of the CSE?
For retail investors, my message would be to not go purely on sentiment. Study the market, take a long-term view and be patient. Look at research, study the market before coming in and investing. Institutional investors do their research. With regard to listings, we will have to go and market the benefits of listing to the companies to get them onboard. This is something that we are doing currently.