June 2011 - Guide to CSE


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Wednesday, June 22, 2011

IPO Fund for retailers

8:18 AM 0
The country’s first ever IPO fund was launched yesterday with focus to broadbase investor strength especially regarding retail investors. The Fund will invest only in IPOs in Sri Lanka providing an opportunity for the retail investors to increase their share purchasing powers at IPOs. “We do not invest in the stock market and the investors are guaranteed a fixed return on their investment, Ceylon Asset Management Managing Director Dulindra Fernando told the Daily News Business.
Dulindra Fernando
“Asia has a fast growing IPO market with two third growth coming from this region. The IPO companies represent new Sri Lanka and there will be an IPO boom in the country in the next five years,” he said.
The lull period in the Sri Lankan IPO market for the past decade due to war is now having an upward movement and there are a large number of IPOs in the pipeline.
“These companies secure funds to expand in the fast growing sectors in the Sri Lankan economy and markets. This will fuel the golden era of fast GDP growth, ” Fernando said.
The fund will offer direct exclusive opportunity for retail investors where its returns will not be subject to the volatility in the stock market. A special promotional offer of Rs 1,000 investment will be there to encourage the retail investors where the Units are offered at Rs 10 each.
Ceylon Asset Management (CAM) and Deutsche Bank AG have joined hands to launch the IPO Fund to exploit an opportunity created by the Security Exchange Commission of Sri Lanka (SEC).
The SEC has passed legislation that reserve 10 percent of each IPO for eligible Unit Trusts.
The tax-exempted Unit Trust is designed to safeguard capital investors while generating tax-free interest income by investing all excess cash in short term fixed income instruments.
The Fund will accept investments upto a maximum of Rs 10 million where several high profile IPOs are expected during this year.

Adopted from Daily News
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Tuesday, June 21, 2011

SEC එකෙන් අලුත් වැඩක් (SEC to develop new websites with Cyber Concepts)

9:23 AM 0
සමාවෙන්න ඕනෙ, සිංහලට පරිවර්තනය කරන්න ටිකක් කරදර නිසා කෙලින්ම ඉංග්‍රීසි ලිපියම දැම්ම.

The Securities and Exchange Commission ( SEC) will promote the Sri Lankan capital market to overseas investors, local companies and retail investors soon. The Sri Lankan stock market has been the best performing market in the world in 2010.

SEC Director General Malik Cader handing over the contract documents to Cyber Concepts (Pvt) Ltd CEO Engineer Ravi Rajapathirane. Officials of both organizations look on
Cyber Concepts Pvt Ltd an ISO 9001 : 2008 certified software and web solutions provider has been awarded the contract to develop and host the web sites of the SEC of Sri Lanka, the Financial Services Academy (FSA) and the Capital Market Information Centre (CMIC) and it will help the booming investment and capital market development of Sri Lanka.
The site will help foreign investors to know the current market situation of Sri Lanka and invest more in the market. It will help to add more new investors and improve the interest of current investors.
Cyber Concept Software Architect Engineer Krishnajina Rajapathirane explaining the concept of the three portals, mainly the information portal of SEC, FSA and CMIC said the objective of the sites are to disseminate reliable, accurate and timely capital market information to shareholders, potential shareholders, academia and the public at large.
He said that the project will be separated into three main areas SEC, CIMIC and FSA web portals. SEC will mainly focus on investor information and market information. The Securities and Exchange Commission is hoping to provide information for foreign and local investors and government agencies and listed companies. This site will be supporting live share information, online chat, quick announcements, web casting, News updates and Interactive events such as stock market games. It will also have an easy content management system so it will help the SEC to provide timely and accurate information to their focused groups.
The CIMIC site helps most of the people who are involved with capital markets and they have the chance to refer latest capital market data after login to this site. It includes capital market reports, research information, market news and international capital market information.
FSA is mostly an educational oriented web portal and the site will help to develop skills among the persons involved in the capital market operations. The objective of FSA is to become a premier institute in Sri Lanka to provide professional level education related to the development of capital market. FSA focuses to offer four core programmes catering to the needs of different niches in the capital market. These programmes will be focused on market professionals, listed companies, existing and potential investors and market institutions. The site will have an online educational system to provide proper training to focused groups. It will also have a student management system a tutor management system and an online payment management system as well.
The SEC Web portals are targeted towards the academia of the national universities. The websites will be in line with advanced web technology to create a user-friendly, informative and secure web portal with an intuitive interface for the SEC, FAS and CMIC websites which should present information from diverse sources. The site will include the facility that allows the SEC staff to easily update content after the initial launch.
The web content will be available in all three languages.

Adopted from Daily News
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Friday, June 17, 2011

Challenging and exciting job in critical moment of capital market – New CSE Chief

8:00 AM 0
The newly-appointed Chairman of the Colombo Stock Exchange (CSE) Krishan Balendra  yesterday described his new task as a challenging and an exciting one amidst a critical juncture of the capital market in post-war rebounding Sri Lanka.
“I am excited about the challenges that come with the role of being Chairman of the CSE when the capital market has seen exponential growth with the end of the war. But I am confident and optimistic about making the Colombo bourse more dynamic and bringing it on par with international standards,” said Krishan, who at the age of 38 is the youngest to occupy the post of CSE Chairman.
He was unanimously appointed on Tuesday evening by the newly-elected Board of the CSE following the Annual General Meeting. Representing John Keells Stock Brokers on the CSE Board since March 2008, Krishan is also the senior most member on it. President and member of the Group Executive Committee of JKH, Krishan is responsible for JKH Group’s retail sector, corporate finance and strategy function as well as stock broking operations.
Krishan said that the end of the conflict and the resultant rebound in the economy had given a new fillip to the capital market.
Increased level of activity and higher number of listings with more in the pipeline along with renewed foreign interest have made it critical and challenging times for the capital market.
“The previous Chairman (Nihal Fonseka) had implemented several initiatives and we will take those forward as well in consultation with and support from all stakeholders to bring the CSE on par with international standards by swiftly introducing Central Counterparty (CCP) as well as Delivery Versus Payment (DVP) mechanisms,” said Krishan, adding that increasing listings would be another priority.
“There are several new initiatives which need to be implemented. The new Board will give direction to the CSE management team led by the CEO in this regard,” he added.
With gains of 125% in 2009 and 96% in 2010 along with near 7% year to date, the Colombo bourse has been regarded as the world’s most consistent best performing market. CSE at present has 255 listed companies.
The new Chairman as well as the Board begins a fresh three-year term amidst high volatility in the market of late with majority of retailers chasing after penny and junk stocks. Lack of high liquidity, limited investment options within the bourse as well as corporate governance issues are some of the other major challenges the new team at CSE faces, apart from the elusive demutualisation exercise.
Some claimed that since the introduction of automated trading in early 2000, the CSE hadn’t continued with its innovation and dynamism, whereas other bourses in the region which were lagging behind had progressed much rapidly. However, those supportive of the CSE maintained that it remained robust, hence was able to facilitate and be the platform for an unprecedented rebound in stock market activity post-war.
Following Tuesday’s AGM, the new CSE Board comprises Krishan Balendra (Chairman), Nihal Fonseka, M.R. Prelis, Dr. Saman Kelegama and Vajira Kulatilaka (all elected members) and Ashroff Omar, Dhakshitha T. W. Thalgodapitiya, Prof. Laksiri Fernando and Hiran M.C. de Alwis, who are Government appointed members.
Fonseka served for five years as Chairman of CSE with a first term of three years beginning 2006 followed by two more on request from the Board. The years 2009 and 2010 were the best years of CSE in its history.
In addition to being President and member of the Group Executive Committee of JKH, Krishan is also a Director of Union Assurance and Nations Trust Bank. He started his career in investment banking at UBS Warburg Hong Kong and was at Aitken Spence and Co Plc. in corporate finance prior to joining JKH. He holds an LLB (University of London) and an MBA (INSEAD).

Adopted from Daily FT
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Monday, June 13, 2011

සුභාරංචියක් - කොටස් වෙළඳපළ පිළිබඳ පුහුණු පාඨමාලාවක්

10:09 AM 0
ඔන්න කොළඹ කොටස් නිකුතුව මගින් හොඳ පුහුණු පාඨමාලාවක් පිළිබඳ තොරතුරක් තමා මේ.

අයදුම්පත මෙතනින් භාගත කරගන්න.

මේ වගේ වැඩමුළු ගැන දැනගන් අපේ feed එකට එකතු වන්න.

සියළු ලිපි සඳහා ඊ මේල් ලිපිනයෙන් අප හා එක්වන්න:  
අනෙකුත් RSS පෝෂක ලබා ගැනීමට මෙතනින් යන්න.
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Friday, June 10, 2011

Sri Lanka Softlogic IPO oversubscribed

8:50 AM 2
June 09, 2011 (LBO) - A share offer by Sri Lanka's Softlogic group to raise four billion rupees was oversubscribed on the opening day Thursday, a stock exchange filing said.

Registrars to the issue P W Corporate Secretarial said the offer will close in the afternoon.Softlogic Holdings is issuing 139 million ordinary shares at 29 rupees each to raise funds mainly to repay debt taken for investments and for increased working capital.
It was one of the biggest initial public offers on the Colombo bourse this year.

Adopted from LBO.
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Saturday, June 4, 2011

Unit Trusts support to plan investments

9:46 AM 0
Adopted from Daily Mirror

As a continuation of our discussions about Unit Trusts in the past three weeks, now is useful to understand the types of structures available in Sri Lanka. During the first decade of operation since beginning in 1991, it was only permitted to operate open - ended funds. However, the Unit Trust code was amended by the SEC in 2002 to enable the launch of close-ended funds. The issue related with the close-ended funds is that the investors may find it difficult to withdraw their investments before the terminal date of the fund. To overcome this issue the Managers may introduce an interval scheme so that the investor can withdraw full/part of their investment if necessary and continue with the balance until the termination of the fund.  In the event the full withdrawal is permitted, the remaining investors will continue till end of the fund’s full period. Alternatively, the units of the close-ended fund can be listed on the Colombo Stock Exchange (CSE) to provide required liquidity for investors to sell and realize into cash.
Definition of open-ended fund

The open- ended funds do not have a fixed maturity. You directly deal with the Unit Trust for your investments and redemptions (Withdrawals). The key feature is the liquidity. You can conveniently buy and sell your units at Net Asset Value (NAV) related prices.

Definition of close-ended fund
The funds that have a specific maturity period often ranging from 2 to 10 years are called close – ended schemes. You can invest in the fund at the time of the initial public offer (IPO) and thereafter buy or sell the units of the fund on the CSE where they are listed. The market price of the units at the CSE could vary from the fund’s NAV depending on the demand and supply situation, unit holders’ expectations and other market factors.

Definition of interval scheme
This combines the features of open- ended and close – ended funds. The interval schemes essentially address the need for redemption and periodic investments of the investing public. The investor in a close-ended fund may have the facility to periodically at a pre determined dates at NAV related prices withdraw or invest additional money in the fund. New investors can also join the fund at those interval periods. The interval features can be incorporated in listed close-ended funds as well.

Planning investments
Before commencing any investments it is necessary to decide on your goals and your time frame. 

Particularly answer the following questions:
What are you investing for?  To meet child’s education or marriage, to meet future health expenses, to buy a house, retirement or any other long term preferences.

How long do you expect it will take to make enough money to meet your goal?
When will you want to spend the money you are investing?
These are important questions to be answered to determine your investment plan and the time question.

You may have a lump sum to invest which you would like to grow or from which you wish to draw an income. You may decide to invest in installments periodically (for example, on a monthly basis) with the idea of accumulating up a lump sum.

Generally, the longer the time period before you need the money, the greater the amount of risk you are able to take in the expectation of greater reward. It is important to realize that you do not want to find yourself having to sell your investment just when the price has fallen. If you plan to spend the money soon, say in few years perhaps to meet your Child’s college fees or nearing retirement and are planning to take an income from your retirement fund, you will have to safeguard the value of your money.
If your circumstances change after making your investment than you have anticipated, and as a result you have less time to wait, then it is important to monitor your portfolio and change your asset mix to accommodate your new objectives.

Generally, the less time you have before cashing in your investments, the less risky your holdings need to be. In other words you have to consider investments that have safety and liquidity features. 
Deciding on the best asset mix

The value of shares goes up and down in the short term, and it can be difficult to predict. However, in the longer term they can be expected to deliver better return than other assets. It is also true but lesser extent for bond (debenture) investments. The cash only offers certainty in the short term.
Broadly speaking, you can invest in shares for the long term, fixed income securities for the medium term and cash for the short term.

As the length of time you have shortens, it becomes necessary to change the asset mix of your investments, for example, gradually moving from shares to bonds to cash. It is often possible to choose an option to lifestyle of your investments – this is where your mix of assets is risk – adjusted to reflect your age and time you have before you want to spend your money.

Managing this risk is a skill. It needs a high level of numeracy, a good understanding of why and how the value of investment s can change, the presence of mind not to be swayed by every bit of news you hear and the ability to be objective. It may take time to learn these characteristics.

If you are unsure, talk to a financial advisor with the investment skills to help you. They can help you to decide on your initial investment and help to rebalance it as your circumstances or market condition change. The following illustration is to give an idea to you when constructing an initial investment portfolio:

The income can be in the form of interest or dividends. If you take and spend this income, your investment will grow more slowly than if you let it accumulate by reinvesting it. By not taking income you will earn interest on interest and the reinvested dividends will increase the size of your investment, which may generate further growth. This is referred as “compounding”. The Unit Trusts offer automatic reinvestment feature to achieve the compounding effect in your long term investments.

The above idea can be used in investment in Units of Unit Trusts. In summary, before investing you have to decide on your goals, time period and when you will spend that money. After identifying those parameters you can start investments directly or through Unit Trusts which offer share, bond, and cash management types of funds to select according to the above chart.
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