Equity and capital market records US$ 459mn net inflow in 2010


Sri Lanka’s equity and capital market recorded a net inflow of investments amounting to US$ 459 million in 2010, the Central Bank announced yesterday (4). "In 2010, there was an inflow of funds in to the equity and capital market amounting to Rs. 215.9 billion, approximately US$ 1.91 billion. The outflow on account of repatriation of investments and as well as dividends and income amounted to Rs. 164.1 billion, approximately US$ 1.45 billion," the Central Bank said. "Accordingly, a net inflow of foreign investments was recorded in 2010 amounting to Rs. 51.8 billion, approximately US$ 459 million," the bank said.

In terms of exchange control regulations, foreign investments in the equity and capital market are routed through Securities Investment Accounts (SIA) maintained in licensed commercial banks, which were analysed by the Central Bank to obtain the data presented above.

However, this year the equity and capital market has seen a net outflow of foreign investments from the Colombo Stock Exchange, but the Director General of the Securities and Exchange Commission said these funds were not leaving the country.

Securities and Exchange Commission (SEC) Director General Malik Cader told journalists recently that foreign investors were net sellers in the Colombo Stock Exchange as they were realising profits by selling their shares.

Last year, foreign investors were net sellers amounting to Rs. 26 billion (about US$ 236 million and this year up to February 23, foreign investors had been net sellers amounting to Rs. 6.7 billion (about US$ 60 million).

"We have discussed this with the Central Bank and they said these net foreign sales did not mean funds were leaving the country but are being invested in other areas of the economy. So these correspond only to an outflow from the capital market but not the country," Cader said. "Foreigners exiting the stock exchange maybe investing in government securities."

Cader said this analysis was possible by monitoring the SIAs.

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