CSE’s newest digital push expected to make it worth US$ 60 billion in 5 years

by Sanath Nanayakkare

The Colombo Stock Exchange (CSE) with its newest digitalization drive should do well enough in the next 5 years to accumulate a market capitalization of US $ 60 billion, Ajith Nivard Cabraal, State Minister of Money and Capital Market and State Enterprise Reforms said yesterday.

“Then the Colombo Stock Exchange will have a capacity which can provide funding not only to the government sector but also to the private sector making sure that the President’s goals of prosperity will be achieved,” he said.

Minister Cabraal made these remarks on the trading floor of the Colombo Stock Exchange (CSE) yesterday at a special market opening ceremony where Prime Minister Mahinda Rajapaksa launched a new digital platform for CSE, enhancing the investment experience for investors, stockbrokers, listed companies and other stakeholders.

The digital strategy themed ‘Hyper-Leap to the future’ is formed to digitalise all stakeholder touchpoints enabling end to end connectivity electronically. It will position Sri Lanka to become a global financial hub redefining the stock market landscape.

Elaborating on his point the state minister said,” As a person who on been involved in the stock exchange and securities matters for a long time in various capacities, I know how difficult it is to get a project of this nature going. I know you have put in a lot of work. Way back in 1993 at the time I was the president of the Institute of Chartered Accountants, we organized the mCentral Depository System (CDS) for the first time. I think that was a revolution – a special one- because all the brokers who were struggling with share certificates and documentation were suddenly relieved of all these duties and they could go out and sell, go out and make the market a lot more vibrant. I see an opportunity like that once again,

“The digitalization will take away from brokers as well as market players a lot of paperwork and mundane tasks that have been so far done by you personally. When you are relieved of these duties I am sure you will find enough time to make the market work more efficiently and productively. You need to have buyers whose numbers are increasing and you need to have sellers who will be providing the supply of shares in this business. This means you need to focus on these vital areas and aspects in the market.

“You have got to make sure that the number of shares you have is expanded regularly. I have been around long enough to know that the number of companies that have been trading on the stock exchange has remained almost stagnant for so many years. Every time when someone asks how many companies are there on the stock exchange, we say 200 something. I think this ‘200 something’ has been the number for the last 30 years. So, 5 years from now, we’d like to see this number being spoken of as ‘500 something’. I think you all can do that. As CSE chairman already mentioned there is an effort to make these numbers grow. There is ample opportunity. If all of you take the pains to do that, you can make it happen.

“In 2014, when President Mahinda Rajapaksa relinquished office at the end of 2014 – the market capitalization of CSE was 25 billion dollars. By the end of 2019, it came down to just half of that. – only 12 ½ billion dollars, marking a massive drop. We need to grow this market again. We need to make sure that your efforts are directed towards making the market to expand. The Director General of SEC said, you want the government to come here and use this as a repository of funds. With a 12 ½ billion dollar market cap, I don’t think you can do that. So set your sights high. Set your sights at US $ 60 billion dollars, if I may suggest, for the next 5 years. Then you will have a capacity which can provide funding not only to the government sector but to the private sector making sure that the President’s goals of prosperity will be achieved.

“My Friends, we have our work cut out. The President and the Prime Minister have given you the indication that support will be extended to the stock exchange. I have been appointed as state minister in order to make us responsible for that task. So, I personally will be supporting you. I would like to see you take the direction to move forward. Now you have digitalization in place. I think you need to build on that foundation. There will be plenty to do to achieve our goal. You have got to make sure that you bring in capital that will support the market. This is not going to be easy. I remember from 2007 onwards we were going abroad, we were making sure that capital was adequate in this country.- When we could not raise it globally, we raised it from foreign sources. So, you need to do that. You need to provide capital to companies and you need to provide capital so that new instruments could also be put in place in this country. It would be of total relevance to see an SME Board, a Startup Board, an IT Board and maybe a mechanism to list the BOI companies also on the stock exchange. This means there ‘s plenty of space. Now that you have had the first hurdle cleared, the next is also going to be exciting and we’d like to see you take it up from here. Together we can usher in an era of prosperity in our country with the participation of a truly representative investor community,” he said.

SEC chairman President’s Counsel Viraj Dayaratne, SEC Director General Chinthaka Mendis, CSE chairman Dumith Fernando, and CSE CEO Rajeeva Bandaranaike also spoke at the event.