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COLOMBO, July 31 (Reuters) - Sri Lanka is ready to make significant policy changes in an effort to revive its faltering stock market which has fallen 18.6 percent since the start of the year, P.B. Jayasundera, the island nation's treasury secretary, said on Tuesday.
Stockbrokers have long complained that Sri Lanka's Securities and Exchange Commission (SEC) overregulates the market, blaming it for the sharp fall in the main index along with rising interest rates, exchange rate volatility and the prevalence of market manipulation.
However, the SEC has argued that tough regulation has been necessary since some high net worth investors have been manipulating the market through so-called "pump and dump" deals, earning billions of rupees at the expense of retail investors.
On Tuesday, Jayasundera met senior officials from the SEC and the Colombo Stock Exchange as well as stockbrokers to discuss the situation, saying it had been agreed that the government and stakeholders would take specific measures to remedy the situation.
"Everyone agreed to work together on an agenda consistent with immediate short-term measures including an enhanced credit facility to revive retail interest and medium term support to brokers to build up their capital infrastructure," he told Reuters.
"The 2013 budget will address many structural measures obstructing a vibrant market," he added, declining to detail the precise nature of the planned measures.
LOWER TRADING VOLUME
Trading volume has dropped sharply and retail investors in particular have lost confidence in the bourse after losing the majority of their investments since the market began to drop in the middle of last year.
Stockbrokers complain that some policy changes - including broker credit limits to prevent a credit bubble and a 10 percent price band cap to discourage market manipulators - have dented investor sentiment and sidelined retail investors who have been unable to get credit to support buying.
Retail investors account for 60-80 percent of daily trading on the Colombo stock Exchange.
"(The) treasury secretary's message was that all the stakeholders should work together and boost the market in the short term with policies encouraging the people who have appetite to take risks," Sriyan Gurusinghe, the head of the Colombo Stockbrokers Association, told Reuters.
"He asked not to regulate to an extent that will kill the spirit of the market and also to relax possible stringent policies to boost retail participation."
Foreign investors have, however, been net buyers this year, acquiring shares worth 25.6 billion Sri Lanka rupees ($194.16 million), a phenomenon analysts attribute to the fact that the rupee has lost around 16 percent of its value since November.
http://www.cnbc.com/id/48426969
Stockbrokers have long complained that Sri Lanka's Securities and Exchange Commission (SEC) overregulates the market, blaming it for the sharp fall in the main index along with rising interest rates, exchange rate volatility and the prevalence of market manipulation.
However, the SEC has argued that tough regulation has been necessary since some high net worth investors have been manipulating the market through so-called "pump and dump" deals, earning billions of rupees at the expense of retail investors.
On Tuesday, Jayasundera met senior officials from the SEC and the Colombo Stock Exchange as well as stockbrokers to discuss the situation, saying it had been agreed that the government and stakeholders would take specific measures to remedy the situation.
"Everyone agreed to work together on an agenda consistent with immediate short-term measures including an enhanced credit facility to revive retail interest and medium term support to brokers to build up their capital infrastructure," he told Reuters.
"The 2013 budget will address many structural measures obstructing a vibrant market," he added, declining to detail the precise nature of the planned measures.
LOWER TRADING VOLUME
Trading volume has dropped sharply and retail investors in particular have lost confidence in the bourse after losing the majority of their investments since the market began to drop in the middle of last year.
Stockbrokers complain that some policy changes - including broker credit limits to prevent a credit bubble and a 10 percent price band cap to discourage market manipulators - have dented investor sentiment and sidelined retail investors who have been unable to get credit to support buying.
Retail investors account for 60-80 percent of daily trading on the Colombo stock Exchange.
"(The) treasury secretary's message was that all the stakeholders should work together and boost the market in the short term with policies encouraging the people who have appetite to take risks," Sriyan Gurusinghe, the head of the Colombo Stockbrokers Association, told Reuters.
"He asked not to regulate to an extent that will kill the spirit of the market and also to relax possible stringent policies to boost retail participation."
Foreign investors have, however, been net buyers this year, acquiring shares worth 25.6 billion Sri Lanka rupees ($194.16 million), a phenomenon analysts attribute to the fact that the rupee has lost around 16 percent of its value since November.
http://www.cnbc.com/id/48426969
