Predominantly rupee-driven stock market can mitigate effects of exchange rate: CSE chairman

by Sanath Nanayakkare

As a large number of investors in the stock market at the moment are local rupee investors rather than others, the exchange rate of the local currency has been less severe on stock trading, chairman, CSE Dumith Fernando told ‘The Island Financial Review’ yesterday.

Responding to a question on the potential effects of the current exchange rate volatility on stock trading, the CSE chairman said, “Generally speaking, at the moment most of the stock market investors are local rupee investors. So clearly the exporters will find the situation positive and net importers would find it negative. This means there will be individual companies that are ‘up and down’, but as the overall market at the moment is driven by local rupee investors, the impact of the exchange rate can be mitigated.”

CSE chairman made these comments soon after WindForce Plc began trading yesterday.

When asked about the current trend where foreign investors remain net sellers while recording low participation on the trading floor of the CSE, Fernando said, “Continuous improvement in the market, positive macro economic aspects and with positive news like the stock debut by WindForce Plc, the China Development Bank loan and a few other things, confidence will be rebuilt on the strength of the currency. I do feel that foreign investors will start looking at the CSE in the time to come. In fact, we are trying to make a big push to market the potential here with the Board of Investments (BOI) and the Chamber of Commerce to attract foreign investors. We have planned a big virtual investment conference – the first of its kind – to try and educate internationally. We are expecting about a 1,000 participants for the conference. We are preparing the invitations and hope that it will be a key event for potential investors and investors keen to come here to be informed about the positive growth prospects of the market here.”

Asked when he hopes to see a positive attitude in foreign investors towards the CSE, he said, “Probably we should see this shift in the second half of this year.”

Windforce Limited, renewable firm, began trading above its price of 16 rupees per share yesterday after raising 3.2 billion rupees for wind power projects in Sri Lanka and Senegal.

The firm which started in 2020 has 27 power plants with 218 megawatts of capacity. Of the total 55.4 percent is based in Sri Lanka and the rest in Uganda.