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Sri Lanka tries to woo Middle Eastern investors.

Dubai: The Sri Lanka government's finance and investment officials met Dubai-based fund managers and businesses on Monday in an effort to drum up foreign investments in various sectors, including capital markets, tourism, infrastructure and financial services.

In their presentations, the delegation, which comprised two government ministers and officials from the Colombo Stock Exchange, Securities and Exchange Commission and Investment Board, sought to reassure the prospective investors of peace returning permanently to the island nation after almost 30 years of a "brutal war", and that proactive steps were being taken to develop the equity and bond markets amid concerns of lack of liquidity and whether regulations are in place for foreign investors' entry and exit.

Dubai was the fourth stop in its continuing roadshows which started in late 2011. The next destination is Hong Kong.

"When we spoke to the people in the industry, the feedback we got was that Dubai was where a lot of the major funds that invest in the region are headquartered," said Krishan Balendra, chairman of the Colombo stock Exchange. "Like what Singapore is to East Asia, Dubai is to Middle East. We are really targeting those fund managers who are based here."

Making a case for funds to invest in the capital markets, Balendra said that while the equity market with a capitalisation of $19 billion is indeed a small market, "it is the smallness that provides opportunities to investors in a rapidly growing market."

According to Balendra, low valuations compared to its regional peers, low debt levels of the companies, S&P index's more than 30 per cent returns in one year, and a proposal to make it mandatory for listed companies to have a free float of 25 per cent make it one of the attractive markets in the world. Lack of liquidity has been a concern among foreign investors.

"In our view, looking ahead the fundamentals of the Sri Lankan market look very, very positive," said Raza Meghji, chief financial officer of DIFC-based Eagle Investments, which is part of the Kuwaiti conglomerate National Industries Group. The focus of Eagle Investments in Sri Lanka has been direct investments and over the last year it has acquired "a bunch of companies in the financial services sector in Sri Lanka, through our proprietary arm."

The bond market currently is about two per cent of the capital market's make-up and officials argued that it is poised to take off.

As someone who planned to meet with the officials of Sri Lankan corporates and also arrange for local UAE banks who are interested in lending to these corporates during the meet yesterday, Rizmy Shariff, head of Middle East at Ataraxia Capital Partners, said he is hopeful of the corporate debt market growing rapidly.

"We have found local and other Middle Eastern banks very interested in corporate debt because of the potential growth in Sri Lanka, and very attractive yields as the interest rates are very high," Shariff said.

Being an oil importer from the region -- with the oil bill being about $4 billion -- Sri Lanka's relations with the Middle East is close. But it is tourism that is increasingly becoming an attractive sector for the country amid the growth in tourist arrivals from the Middle East. It has grown from five per cent before the end of the war in May 2009 to 15 per cent. Currently, the number of tourists visiting Sri Lanka is around 1.2 million. The government has set a target of 2.5 million tourists by 2016.

Last year, foreign direct investment to Sri Lanka was about $1.2 billion and it's expected to go up $2 billion this year.

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Publication:Gulf News (United Arab Emirates)
Geographic Code:70MID
Date:Jun 4, 2013
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