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INVESTING IN SHARES
A BASIC GUIDE
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Colombo Stock Exchange - Investing in Shares – A Basic Guide2
CHIEF EXECUTIVE OFFICER’S MESSAGE
Today’s world is one in whichboth nancial literacy and theability to condently makeindependent investment
decisions are increasingly more important or the generalpublic.
Welcome to the Colombo Stock Exchange!
Congratulations on choosing to learn about investing in shares and making the rst step towards including shares in yourinvestment strategy. As the only share market operator in Sri Lanka we are dedicated to investor education and assisting
investors to amiliarize themselves with shares as an investment option. You may already know that shares can be viewed
as an asset class which can help investors realize long term nancial goals. Today’s world is one in which both nancial
literacy and the ability to condently make independent investment decisions are increasingly more important or the
general public. For wise investing, knowledge is the keystone. It also helps i you are prepared to exercise some diligence,
discipline and common sense in making your investment choices. We hope that by reading this basic guide that you would
be encouraged to start a productive journey in share investment. It is our aim to provide you with a oundation rom which
you can urther explore the possibilities that the world o share investment can ofer.
We wish you success in your investment journey.
Ms. Surekha Sellahewa
Chie Executive Ocer
Colombo Stock Exchange
30th April 2012
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Colombo Stock Exchange - Investing in Shares – A Basic Guide 3
About the Colombo Stock Exchange
What is the Colombo Stock Exchange?e Colombo Stock Exchange (CSE) operates the only share market in Sri Lanka and is responsible or providing a transparent
and regulated environment where companies and investors can come together. e CSE is a company that is limited by
guarantee established under the Laws o Sri Lanka. e CSE is licensed by the Securities and Exchange Commission o
Sri Lanka (SEC) and is a mutual exchange consisting o 15 Members and 14 Trading Members. All Members and Trading
Members are licensed by the SEC to operate as Stockbrokers.
At present the CSE unctions as a market operator and through its ully owned subsidiary, Central Depository Systems
(Pvt.) Limited (CDS), acts as a clearing and settlement system acilitator. e CSE also oversees compliance through a set o
rules, promotes standards o corporate governance among listed companies and is actively involved in educating investors.
In the course o its operations, the CSE interacts with many customers and stakeholders which include issuers (such as
companies, corporations and unit trusts), commercial banks, investment banks, und managers, stockbrokers, nancial
advisers, market data vendors and investors.
A brief history of the CSEe CSE’s origin story runs back to the 19th century. e trading o shares in limited liability companies began with the
inception o the Colombo Share Brokers Association (CSBA) in 1896. In 1904 the CSBA changed its name to the Colombo
Brokers Association (CBA).
e share market was opened to the public in July 1984 as the CBA recognised the importance o mobilizing local savings
to meet the capital requirements o the growing private sector o the country. A public trading oor was established with an
‘Open Outcry’ system o trading, instead o the ‘Closed Door’ system o trading utilized previously.
In 1985, a ormal stock exchange was established in Sri Lanka. It was then called the Colombo Securities Exchange (GTE)
Limited and in 1990 came to be known as the Colombo Stock Exchange.
e CSE was one o the rst Exchanges in the region to have in place a depository or listed securities with the implimentation
o its clearing and settlement house and in 1991 successully installed an automated electronic clearing and settlement
system-Central Depository System (CDS). e CSE introduced its Automated Trading System (ATS) in 1997. is has
enhanced the transparency and eciency o the securities market in Sri Lanka. In recognition o the technology, systems
and regulation, the CSE was admitted to the World Federation o Exchanges (WFE) in 1998, becoming its rst South Asian
member. It was also a ounding member o the South Asian Federation o Exchanges (SAFE) in 2000.
In 1999, the CSE commenced the broadbasing o the stock market by establishing a regional oce in Matara in the
Southern Province o Sri Lanka. In addition the CSE currently operates branches in Kandy, Kurunegala, Negombo and
Jafna, providing access to regional investors.
With the near and medium term outlook strong or our economy, the position o the CSE as a conduit o investment has
become paramount. As per its Vision “To be the preerred choice or creation o wealth and value” the CSE endeavours to
continually improve and expand in its role as market developer and regulator.
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Colombo Stock Exchange - Investing in Shares – A Basic Guide4
Listing PlatformsEquity securities o a public company can be listed on either the Main or Diri Savi Board o the CSE. e Main Board
consists o companies which have a larger capital base while medium to small companies and start-up companies are listed
on the Diri Savi Board.
Price Indicese CSE calculates two main Price Indices, namely, the All Share Price Index (ASPI) and the Milanka Price Index (MPI). Price
indices are also calculated or each o the 20 business sectors. Total Return Indices (TRI) are calculated to track the market
perormance on a Total Returns basis. e TRI exceeds the scope o existing price indices (ASPI, MPI) and incorporates
returns rom dividends into its computation. CSE publishes TRI based on the ASPI, MPI and the 20 Sector Price Indices.
Data DisseminationLive market inormation is presently being disseminated through stockbrokers, inormation vendors, CSE branches, print
and electronic media. International nancial press such as Reuters, Telekurs and Bloomberg also provide daily online
trading inormation to investors worldwide.
e CSE website www.cse.lk provides access to a comprehensive array o real time market inormation, order book
inormation and includes charts and graphs o market and company perormance to help existing and potential investors
make inormed investment decisions.
e website is designed to unction as the primary communication channel o the CSE and most inormation on the website
is downloadable in Excel, CSV and XTML ormats. e CSE website also acilitates ast access to individual listed company
proles, as well as links to Online Trading platorms ofered by Stockbroker rms.
A dedicated website or the CDS - www.cds.lk is also accessible by the general public.
Market HighlightsNew Phase of Growth in 2010e Sri Lankan equity market moved into a new phase o growth ater the end o the three decade long war, in 2009. e CSE
was ranked the second best perorming market in the world by Bloomberg that year.
With the economy also strengthening ater the
cessation o the war and interest growing in the CSE
as an investment destination, market activity reached
unprecedented levels in year 2010. e CSE was again
ranked as the second best perorming stock exchange in
the world by Bloomberg News and was also ranked the
top perorming broad equity market index rom among
members o the World Federation o Exchanges (WFE).
e rankings reect the growth o the ASPI – which
reects the perormance o the share market as a whole.0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Performance of Indices(Jan 2008 - March 2012)
Index Values
ASPI MPI
J a n - 0 8
F e b - 0 8
M a r - 0 8
A p r - 0 8
M a y - 0 8
J u n - 0 8
J u l - 0 8
A u g - 0 8
S e p - 0 8
O c t - 0 8
N o v - 0 8
D e c - 0 8
J a n - 0 9
F e b - 0 9
M a r - 0 9
A p r - 0 9
M a y - 0 9
J u n - 0 9
J u l - 0 9
A u g - 0 9
S e p - 0 9
O c t - 0 9
N o v - 0 9
D e c - 0 9
J a n - 1 0
F e b - 1 0
M a r - 1 0
A p r - 1 0
M a y - 1 0
J u n - 1 0
J u l - 1 0
A u g - 1 0
S e p - 1 0
O c t - 1 0
N o v - 1 0
D e c - 1 0
J a n - 1 1
F e b - 1 1
M a r - 1 1
A p r - 1 1
M a y - 1 1
J u n - 1 1
J u l - 1 1
A u g - 1 1
S e p - 1 1
O c t - 1 1
N o v - 1 1
D e c - 1 1
J a n - 1 2
F e b - 1 2
M a r - 1 2
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Colombo Stock Exchange - Investing in Shares – A Basic Guide 5
Performance in 2011 Ater signicant growth in two consecutive years 2009 and 2010, the equity market moved towards a more stable status in
2011.
e benchmark All Share Price Index (ASPI) recorded its highest level on 14th February 2011 and closed the year at 6,074.4
points recording a negative YoY growth o 8.5%. e Milanka Price Index (MPI) which ollows the growth o 25 selectedcompanies, recorded a negative growth o 25.9% during 2011 closing the year at 5,229.2.
e table below shows the records achieved during the years 2011 and 2010 as reected by the ASPI and MPI and various
indicators o market size, value and volume growth such as market capitalization, turnover and number o transactions
executed.
Source: Colombo Stock Exchange
*Records achieved up to last practicable date to publication o this document which is 30th April 2012
Committed to Growthe CSE’s strong commitment to Sri Lanka’s development activities has been the basis o its growth and evolvement as a
conduit or resources o savers and investors. As at the date o publication the CSE is home to 279 listed companies.
During the year 2011 the CSE was a signicant source o nance or these companies and helped raise a total o approximately
Rs. 47.2 Bn through Initial Public Oferings (IPO) and Rights Issues. Rs.19.2 Bn in the year 2011 is the highest amount raised
through IPOs.
Records Achieved*
Description Level Reached Date
Highest ASPI 7,811.8 14th Feb 2011
Highest MPI 7,829.1 01st Oct 2010
Highest Annual Turnover Rs. 570.3 Bn 2010
Highest Average Daily Turnover Rs. 2,396.3 Mn 2010
Highest Annual No. o Transactions 4.58 Mn 2011
Highest No. o Trades or a Trading Day 49,921 18th Aug 2011
Highest Market Capitalization Rs. 2,600.6 Bn 14th Feb 2010
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Colombo Stock Exchange - Investing in Shares – A Basic Guide6
In considering the manner in which the CSE has transormed
we can consider some selected indicators:
• Turnovere CSE generated an equity turnover o Rs. 546.2 Bn
during the year 2011 and in 2010 the turnover was Rs.570.3Bn the highest trading activity in CSE history, surpassing
the previous record o Rs. 142.5 Bn or the year 2009. At the
rate o over 303.7%, the growth in the turnover (in USD)
o the CSE was ranked the highest among all member
exchanges o the WFE in the year 2010.
• Market Capitalizatione listed wealth or Market Capitalization o the CSE stood
at Rs. 2,213.9 Bn as at the end o 2011 reecting a slight
increase o 0.15% over the previous year. However, in USD
terms, the Market Capitalization o 2011 has recorded anegative YoY growth o 2.4%.
e preservation o Market Capitalization was a challenge
aced by the exchanges in the world amongst market
downturns. For example among WFE member exchanges,
it was only ve exchanges that were able to preserve their
Market Capitalizations even with new listings during 2011.
YoY Market Capitalization as a percentage o GDP which
is an indicator o the relative size o listed wealth o a
country improved rom 22.6% in 2009 to 39.5% in 2010
and in 2011 it stood at 33.8%. On 31st March 2012, theMarket Capitalization stood at Rs. 2,012.87 Bn reecting a
negative 17.0% decrease rom 31st March 2011 which was
Rs. 2,425.05 Bn.
• Turnover Velocity e CSE has shown a decline in the level o market
liquidity, as measured by the Turnover Velocity. Turnover
Velocity is calculated as Turnover divided by Average
Market Capitalization. Turnover Velocity decreased rom
34.5% in 2010 to 24.7% in 2011.
e declining trend o liquidity is also evident in other
regional exchanges. In comparison to many developed
markets, these indicators are on the lower end, showing
that the CSE has room to grow and has leveraged on the
opportunities available as reected by the improvements
achieved in the past ve years.
0
100
200
300
400
500
600
700
Annual Turnover
06 07 08 09 10 11 12(Q1)
Rs. Bn
105.2105.0 110.5
142.5
570.3546.3
81.7
0
5
10
15
20
25
30
35
40
45
Market Capitalization as a % of GDP
05 06 07 08 09 10 11
%
24.6%
29.8%
22.9%
11.1%
22.6%
39.5%
33.8%
0
10
20
30
40
50
Turnover Velocity (Turnover as % of Average Market Capitalization)
06 07 08 09 10 11
%
14.8%12.7%
16.9% 18.0%
34.5%
24.7%
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Colombo Stock Exchange - Investing in Shares – A Basic Guide 7
e CSE aims at taking up this challenge by pursuing improvements in several areas including market development,
inrastructure, regulation and risk management. It is the CSE’s aim to enhance competitiveness and visibility o the Sri
Lankan share market by capturing a diverse customer base o which we hope you will be a part.
Primer
Why Shares Specically? You may have already heard or read that over a long term, investments in shares outperorm most other investments. A
properly managed equity investment portolio that minimizes manageable risk and maximized returns, will make a good
investment vehicle to surpass ination which is the common enemy o all the investment vehicles.
What are shares? A share is simply a part ownership o a company. It represents a unit in the capital o the company. When you own one or
more shares in a company, you are called a shareholder. In return or investing in the company, shareholders can receive
dividends and other benets such as the right to vote at general meetings o shareholders.
Why do companies issue shares? Equity Capital and Debt Capital businesesCompanies issue shares to raise money rom investors in order to nance and grow businesses. Such nances can be
borrowed or raised by issuing shares. e company can raise unds by borrowing rom a bank or by issuing bonds. ese are
classed as debt capital. e money that a company raises by issuing shares to investors is called equity capital.
Unlike debt capital which is borrowed money which needs to be paid back to the party rom which it is borrowed, equity
capital represents continuous ownership o the company and thereore does not need to be repaid. By becoming an owner
or shareholder o a company you assume the risk o the company not being successul. Ocourse it is equally important to
recognise that shareholders earn a lot i a company is successul.
What are listed companies and what does ‘going public’ mean?Sometimes a company chooses to raise nances by being ‘ listed’ on a stock exchange and issuing shares to investors. is is
called going public. e process o being ‘listed’ enables shares o a company to be traded on that country’s stock exchange.
ese companies are called listed companies. ey need to be in compliance with a particular Exchange’s set o listing rules
which may set out requirements such as previous prot records, issued/paid up capital, minimum numbers o shareholders
and various disclosures to be made to the public, in order to be admitted to the ocial list.
What types of shares are there? A company can issue diferent types o shares such as ordinary shares, non-voting shares and preerence shares to name a
ew. In addition a company can issue any type o share which the laws o the country it is incorporated in allows.
Ordinary SharesOrdinary shares are by ar the most common orm o equity security. Ordinary shares ofer the investor both the right to vote
at the company’s General Meetings and the entitlement to a share o dividends declared. e combination o entitlement to
a share o the company’s prots and control means that, ordinary shareholders are the owners o a company.
In the event the company is liquidated, shareholders will be settled ater all the creditors, depositors and debt holder dues
have been settled.
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Colombo Stock Exchange - Investing in Shares – A Basic Guide8
Non-Voting Ordinary Sharesese shares have the same characteristics o ordinary shares, except the right to vote at the company’s General Meetings.
Preference Sharesese are shares which guarantee priority in the payment o dividends at a predetermined rate. is means that the
preerence shareholder has a claim on the company’s earnings beore an ordinary shareholder. Preerence shares do notentitle the holder to any voting rights. In the event o liquidation, preerence shareholders will have priority settlement over
ordinary shareholders.
Why do Investors Buy Shares?
Shares for DiversicationBecause there is an element o risk in any investment most investors utilize ‘diversication’ as a strategy to reduce and
manage risk. e amous investment adage ‘don’t put all your eggs in one basket’ is the best way to understand what
diversication is.
In the context o investment this means that to minimize risk an investor has to diversiy investments across variousinvestment products. is is because the perormance o markets, shares and certain other investments ollow cycles.
A savvy investor will not limit his investments to one asset class. Some investors all into the trap o putting all their money
into one asset class – usually at its peak, and then watch as another asset class takes of. It is better to diversiy-spreading
your risk, enjoying the upturns in market, rather than trying to ‘time the market’.
I equities are your sole investment, it makes sense to diversiy between diferent companies and sectors. In this way, loss
made on some investments can be absorbed by gains made in others, keeping the overall return on investments positive.
Shares for Capital Growth
Capital growth is the increase in a value o a particular type o asset over time. People invest in shares because they ofer the
possibility that share prices will rise. In act studies have shown that over the long term horizon investment in shares has
provided greater returns than most other orms o savings or investments.
Owning a share with a rising value allows you to grow your investment. In addition, they are either paid dividends and
dividend re-investment plans which can multiply the capital growth efect o a share investment.
Shares for DividendsDividends are returns paid to shareholders out o the company’s net prots in terms o cash or shares. It is a way in which
shareholders are rewarded or providing capital. Dividends are usually paid once or twice a year depending upon the
company’s prot distribution policy. e rate o dividend paid too can vary depending on whether the company is trying toestablish itsel, in which case the rate would be lower. In comparison to a mature company which may opt to pay a higher
rate, again depending on its policy o dividend payment.
Tax BenetsIn Sri Lanka there are no taxes on capital gains arising rom shares which are traded on the CSE. No withholding tax or
stamp duties are charged on share trading transactions which are conducted through the ATS.
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Colombo Stock Exchange - Investing in Shares – A Basic Guide 9
Please note however that a withholding tax o 10% is charged on dividend income. In addition please note that a 0.3% share
transaction levy is payable on the value o all secondary market transactions conducted through the ATS.
Shares for Liquidity and Flexibility Many investments are reasonably illiquid, which means they cannot be immediately sold and easily converted into cash.
Shares give an investor a considerable amount o nancial control because o their exibility and liquidity. In particularordinary shares are oten considered the most liquid o investments. Unlike assets such as property one does not incur
signicant transaction costs or have to spend a considerable amount o time to buy and sell shares. A share transaction
takes three days to settle. ere is also a convenience o divisibility in shares. For example i you own 5,000 shares, a portion
o 1,000 shares can be sold. Fixed assets on the other hand are not easy to section up in this manner.
e risk and reward perspective You need to be aware that there is an element o risk involved i you expect a return on your investment. In the investment
universe the closest we can get to ultimate saety or our investment unds is through the purchase o government-issued
bonds o countries with very stable economic environs. Investing in shares is riskier than purchasing government bonds,
but ofer a greater chance o a higher return due to the increased risk.
e higher the potential return, the higher the risk to your unds. With shares, various actors including the perormance o
the company, the perormance o the stock market as a whole and the general economic climate, can afect the price o your
shares. So, there is certainly an element o risk involved, i the price o your shares has gone down, then the value o your
investment will be reduced. You can reduce your risks with careul planning. ere are strategies to reduce and manage risk
through diversication, as we discussed earlier.
About Wise Investors
Wise Investors understand their needs and nancial ability
Beore even deciding on where to invest you need to decide what your goals are. Financial goals difer rom one to the other.For some, nancial reedom means being able to retire earlier. For others, it would be to provide well or their amily or be
able to enjoy certain luxuries. Do write your goals down.
Once your goals have been decided, it is a must to think about how much money you will need to realise them.
In order to earn this money rom your investment, the asset or product you invest in, must have the ability to grow your
capital. is is where the risk - return tradeof is considered. You should rst think about your goals, the time horizon or
achieving them and the amount o money needed to attain these in the context o the level o risk you are prepared to take.
It is a precautionary measure to invest only the money that you don’t immediately need and won’t need in the oreseeable
uture. Share investments in particular work best when they are held long-term. I you suddenly decide to sell your shares
because you need the money, you should be aware that you would be incurring unnecessary transaction ees and there
could be a possibility o losing money i at the point you decide to sell, the price o the shares has allen to a level lower than
when you bought it.
As all investors want to optimise their ater-tax returns it is also important that you should have at least a basic understanding
o the tax treatment o diferent types o investments.
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Colombo Stock Exchange - Investing in Shares – A Basic Guide10
Wise Investors know what products are available on the marketOnce you have established your objectives you can then discuss a range o products and investments that will assist you in
constructing a suitable portolio or your purposes.
Although you can consider making your own investment decisions by inorming yoursel well, it is always more prudent
to ask a qualied nancial proessional who is well versed in advising the public about investment options. Make sure youunderstand what you are investing in.
On the CSE the ollowing types o securities are available or investment:
• Ordinary shares with voting rights
• Ordinary shares without voting rights (Non-voting shares)
• Warrants
• Debentures
• Closed End Funds
In addition to securities that are listed on the share market a range o securities that are not listed can also be purchased
rom unit trust management companies, commercial banks, dealers o government debt instruments and other reputable
rms which ofer nancial and investment services.
We cannot stress enough that you should seek proessional advice i you ail to ully understand the eatures o an instrument,
the investment-worthiness o the issuer or i any other doubt or conusion arises about the product or its issuer.
Wise Investors understand their level of risk tolerance A wise investor chooses an investment product which not only matches his goals and the amount o money available but
also according to his tolerance or risk. All investments carry a certain degree o risk. Some investors are ‘risk-takers’ and
others are ‘risk-averse’. An investment strategy that a wise investor pursues would t his / her risk prole.
Which prole describes you best?Financial proessionals who manage investments on behal o clients (portolio managers / investment managers) prole
their clients according to the way they perceive the client’s willingness to take risk with unds invested.
Some such broad risk proles are given below or your understanding:
• Conservative risk prole: Aims for capital protection - Takes very low risk Your primary investment objective is to preserve your capital or the principal amount you invested. You want to earn
a predictable ow o income rom your assets. is means you nd it more reassuring to invest in products with xed
maturities and predetermined returns. Capital growth or growing your wealth is o secondary importance. You are willing
to take only limited risks with your assets usually over a short term investment horizon.
• Defensive or Moderate risk prole: Aims for gradual capital growth - Takes low risk Your principal investment aim is to gain a relatively stable and regular income. You are willing to take a moderate level o
risk with the assets you invest in. You aim at generating a gradual increase in your wealth in the long term. e deensive
portolio consists mainly o diversied xed income securities, with a small portion in shares.
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Colombo Stock Exchange - Investing in Shares – A Basic Guide 11
• Balanced risk prole: Seeks a balance between risk and return Your main aim is to achieve capital growth over the long term. You seek relatively stable returns, but do not mind taking
moderate risks. Nevertheless, you expect some income on your assets. e Balanced portolio is made up with equal
proportions o bonds and shares.
• Dynamic risk prole: Seeks long-term growth potential You want to grow your wealth over the long term. You are willing to take more risks because you want higher returns.
You are aware that shares can uctuate in the short term and consider a temporary all in your investment as a buying
opportunity. Earning income rom your assets is o limited importance. e Dynamic portolio includes investments in a
variety o asset classes, with a high percentage o shares.
• Growth or Aggressive risk prole: On a determined quest for growth Your priority is to generate capital gains. You realize that over time, equity markets usually outperorm other investments.
However, you’re not comortable having all your investments in equities. You are aware that the more riskier the asset that
the value o it may uctuate substantially. You are not araid o speculating or going into what can be considered as risky
economic sectors. You see a temporary market all/setback as a buying opportunity. You are not concerned about how much income your assets earn. e growth portolio includes a majority o shares.
Wise Investors ‘Do their Homework’. ey research and explore. Any investment activity entails gathering knowledge. Especially with share investments you have to be prepared to ‘do the
homework’ on the companies you are investing in. is means you have to keep abreast o what’s happening in the country,
industry and elsewhere which may afect your investment. You would also have to acquire the basic skill o analyzing
company’s annual reports, accounts and other statements in order to understand how the company that you invested in is
perorming and how its price may move accordingly.
Consult your investment adviser/stockbroker to get latest market inormation about shares you intend to buy or sell.
Making decisions based on rumors, particularly i you yoursel cannot explain the choice in a rational manner is certainly
not advisable.
Conscientious investors also set appropriate benchmarks to measure the perormance o their portolio. Your portolio
is successul i it is achieving or surpassing your investment targets. Particularly i you are an investor who has a large
proportion o shares in the portolio, you must note that the overall market can vary signicantly over time periods and will
impact the perormance o your portolio. So it is usual to consider the overall market perormance (in the case o the CSE
the reector is currently the ASPI) as the benchmark. You can also compare the perormance o your shares in comparison
to the sector they belong to.
Wise Investors Diversify In determining the asset allocation (what percentage o your total portolio will be allocated to which asset), diversication
is a necessity. As we indicated previously in this booklet, the best way to minimize risk is to diversiy your investments
across various investment products. I shares are your sole investments, you can spread the risk by diversiying between
diferent companies and sectors.
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Colombo Stock Exchange - Investing in Shares – A Basic Guide12
Share Investment Matters
Getting Comfortable about Share InvestmentsOnce you have made the decision to invest in the share market, getting comortable about the decision is supported by
learning a little more about the market. Although the manner in which you approach the share market depends on your
time horizon, with share investments taking a long term view can be more rewarding.
Taking a long term view on the market means that the priority is time spent in the market and not about timing or looking
or the best time to enter the market. For those investors who have a short term investment timerame, timing is important
as they have to closely keep track o short term movements in prices so as to nd advantageous trading opportunities.
Familiarise yoursel with the manner in which the share market moves just by observing it. You can do this by visiting the
CSE website www.cse.lk. You will be able to see i the overall market as represented by the ASPI or the MPI, as well as how
individual shares perorm under diferent market conditions. e website also ofers online education that is designed or
investors who are starting out under the ‘Getting Started’ banner.
Deciding what shares to buy What shares to buy is a decision that needs to be made in line with your investment goals. Your portolio should be made
up o shares that can attain the perormance goals that you set or the the shares o your portolio.
While you may adopt a long-term investing view, rom time to time there may be share trading opportunities that can
crop up that ofer the chance to grow your investment capital more quickly. Daily /active trading which is a short term
investment strategy needs you to careully consider the risks attached and also the transaction costs.
e kind o stock you should invest in depends on many actors. Nevertheless, what matters most are your investment goals
and the perormance goals that you have set or shares in your portolio.
Depending on your risk prole you can consider matching the various categories o shares that exist in the market which
are discussed below.
• Income shares As the name suggests these shares provide steady income streams or investors. ese shares historically have paid regular
dividend payments as compared to others. In buying these shares important considerations are, the tax applicable on the
dividend, as well as the cost o the shares in comparison to the net dividend paid.
• Value sharesInvestors tend to think o value shares as bargains as they appear inexpensive relative to the earning ability o the company
and other undamental actors. Value shares tend to have low Price to Earning ratios and high Dividend Yields. Long term
investors preer these shares which they oten hold over long time periods, until the true value o the share begins to
emerge in the orm o dividends or increasing share price.
• Growth sharesIssued by companies that have strong growth potential relative to the general economy and their industries. ese shares
may pay low dividends or none at all. Investors o growth shares give up income today (in the orm o dividends) or
returns in the uture, in the orm o growing sales and prots (ie. a rising share price and hence capital gains).
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Colombo Stock Exchange - Investing in Shares – A Basic Guide 13
• Cyclical sharesese shares are issued by companies which are sensitive to business cycles and whose perormance is closely tied to
general economic trends. Prices o cyclical shares can be volatile as they ollow the market expectation o how the general
economy would perorm.
• Defensive sharesese are shares that remain stable even under strained economic cycles. Unlike cyclical shares these are not afected
by general economic trends. Companies producing staples such as ood and beverages, oil and gas, pharmaceuticals and
insurance are oten regarded as deensive shares.
Selecting Shares With the help o an advisor you can start learning how to identiy the above share types. I you want to go at it alone do start
reading up or looking at CSE publications and online education banners on the CSE website. Additionally you can also use
the ollowing to obtain inormation:
• Stockbroker websites and publications
• Newspapers and business magazines
• Business programmes on TV & Radio
• Websites and publications o data vendors such as Reuters, Bloomberg, Telekurs etc.
As you know, companies listed on the CSE are categorised into 20 diferent sectors. Ater having identied which type o
share and industry category you would buy into, you can go on to individual share selection.
When considering buying shares in a particular company, you must rst do your research on that company. Please talk to
your adviser and/or read comprehensively the research material that can give you a good understanding o the company’s
activities and its business situation.
To be wary of !
• Speculative Shares When you are exploring the market and researching or share selection, do be wary o companies which lack nancial
strength or track record in earnings and dividends but appear to be ocused on delivering growth ast. I a company’s
publicized uture growth is not supported by its undamentals, they are high risk investments.
Factors that aect a decision to sell sharesFor many investors deciding to sell their shares can be ar more dicult than deciding to buy. ere are many personal and
market driven actors that can lead to a sell decision. Some actors to be considered are as given below:
• e shares are no longer a good t for your investment goals and risk toleranceis might happen because your goals have changed over time. Alternatively your planned goal may have been achieved.
is would mean that you would systematically start selling the shares that were intended to grow to the nancial goal
planned.
Sometimes an investor may nd that the company invested in does not appeal as a good investment anymore. It may
have changed its business plans and may not look too stable anymore or there is a lot o volatility in its price movement.
is may mean that your investment is no longer within your risk tolerance levels.
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Colombo Stock Exchange - Investing in Shares – A Basic Guide14
• You need to rebalance your portfolioRebalancing a portolio entails bringing the percentage o each asset in an investment portolio (asset allocation) back
into line i it has deviated away rom one’s target asset allocation.
Say at the start you decided that the best allocation or your circumstances is 60% shares, 30% bonds and 10% cash in
your portolio. I you now have 80% o your portolio in shares you may consider that shares represent an overly largeexposure in your portolio. In this case you can consider your overall portolio allocation and diversication within the
shares you posses. You can now consider selling of some o your stocks bringing the asset allocation percentages back
into alignment.
• Tax implicationsConsult an expert i the treatment o taxation o capital gains and dividend income o shares changes at any point
and/or you have reason to believe that the ater tax returns rom your shares may not meet the required target any longer.
Investors may want to sell shares i tax implications disadvantage them in any manner in view o ater tax returns earned
relative to other investments.
• Reinvestment opportunitiesis is when you have identied a company that ofers better returns than o the shares you currently hold. You can sell
less advantageous shares. It is important to consider how your new purchase will t into the rest o your portolio and
your strategies o investment.
• Price movementsI a share price suddenly alls beyond a certain acceptable percentage, some investors consider this a ‘sell’ point, in order
to eliminate the possibility o urther losses. Keep in mind that you may need to have observed the price movements o
a share and have some idea o the share’s volatility to see untoward alls in price. Also note that share prices can recover
ater alling or vice versa, as you will observe once you have spent some time observing and trading on the market.
• Overvalued shares You may want to sell shares when they are pushed way past their true value. A share is considered overvalued i its current
price is not justied by its earnings outlook and is thereore, expected to drop in price. Overvaluation may result rom an
emotional buying spurt, which inates the stock’s market price, or rom deterioration in a company’s nancial strength.
e strategy is to sell when they are over-valued and buy them back ater a market correction has dampened the price.
Seeking professional advice
In our discussions so ar we have recommended to you that it is advisable to seek proessional advice when making investment decisions. Certain matters such as risk proling, investment strategies, taxation and understanding
the market are areas that you should look to obtaining proessional advice on.
Especially i you are an investor who is just starting out, there are advantages to obtaining proessional advice,
although ‘going it alone’ may also be a ullling experience. As you are ultimately responsible or your own
investments you must be comortable with the investment decisions made. So, it is usual or many investors to
combine their own ideas which would be based on their own analysis and research, together with recommendations
rom investment advisors/stockbrokers.
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Buying and Selling Shares on the CSE
Why you need a StockbrokerIn order to provide you with a secure and well regulated trading environment only a licensed Stockbroker can execute
purchase and sale transactions on behal o investors in return or a service ee (brokerage) on the CSE.
e CSE has 29 trading members or stockbrokers which have been licensed. Please reer pages 21 onwards or the completelist.
Availability of SharesShares become available or purchase by investors as detailed below:
• In the primary market from a new issue of shares/Initial Public Oering (IPO) You can buy new shares that are issued by companies which are raising equity capital through a new issue o shares (an
Initial Public Ofering, commonly reerred to simply as an IPO). In an IPO, the company rst submits details o its business
and the proposed share issue or what is called an initial listing application to the CSE. Subsequently a prospectus which
has been approved by the CSE is lodged with the Registrar o Companies in Sri Lanka by the issuing company. Once theprospectus is lodged and registered it can then be provided to potential investors or their consideration.
Companies typically use a combination o broking rms, licensed commercial banks and the investment bank which
advises the company on the IPO, to promote the sale o new shares and distribute the prospectus to potential investors.
e CSE website also makes available details on upcoming IPO’s and provides links to respective prospectus and
application orms.
To buy shares: I you wish to buy shares in an IPO, you should rst review the prospectus careully. It gives you many
details on the company and its operations, the industry trends, the manner in which the IPO is structured and salient
details o the shares, risks attached, nancial statements o the company and other disclosures which are required by law.
You will need to open a CDS account through a stockbroker / custodian bank prior to applying for the IPO.
Once you are comortable about investing, ll out the application orm speciying all requisite details including the number
o shares you wish to buy and send it to the collection points specied in the Prospectus (usually stockbrokers, the company’s
main oce or branches and/or branches o specied banks), beore the application deadline.
To sell shares: once new shares are issued and listed on the CSE, they may trade at a market price substantially diferent
rom the issue price (either higher or lower). is is due to supply and demand or the shares o the company. You will need
to instruct your Stockbroker to sell your shares in the secondary market. See also the sections below titled ‘To trade on the
secondary market’ and ‘Buying and Selling shares-basic steps’.
• On the secondary market through a StockbrokerShares can be bought on the secondary market on any trading day by placing a purchase order with a Stockbroker.
A secondary market is one in which an investor could either buy or sell shares or other securities rom or to another
investor, subsequent to the original issuance in the primary market.
As we discussed beore, an advantage o investing in existing shares are their liquidity. On any trading day, prices at which
investors are willing to buy and sell shares (bids and ofers) are available or the majority o the listed companies.
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However you must note that diferent shares have diferent liquidity levels. Some companies may have very ew buyers
and/or sellers on any given trading day. Liquidity is an important consideration as it afects the price you might have to
pay and the ease in which you can sell your investment.
To trade on the secondary market
You must rst contact a stockbroker /custodian bank and open a CDS account through them.
Once a CDS account number has been obtained, to buy or sell shares traded on the CSE, your order must be placed with a
Stockbroker, typically over the telephone, ax, by visiting or online.
Internet trading Internet trading acilities are available through select Stockbrokers. Online trading provides individual investors with
around the clock access to the trading system along with market data, company inormation and educational material.
It simplies the trading process by empowering investors to secure the decision-making power and trade independently.
Buying and Selling shares - basic stepsPlease amiliarize yoursel with the basic steps you need to ollow to buy and sell shares:
Before placing the order to buy or sell shares, ensure that you are able to procure thefollowing information:
• Your CDS account number
• I you are buying shares, you should make available cleared unds on or beore the 3rd market day ater the purchase.
• I you are selling shares, you need to be aware that sales proceeds are issued by the Stockbroker as ‘account payee’ cheques.
However you may also request or a cheque without crossings.
• Number o shares: speciy the number or, i you are buying, the maximum rupee amount you are willing to allocatetowards the purchase.
• Share price: at market order or limit order?
Market orders are buy or sell orders placed at the prevailing market price and are more likely to result in a trade. For limit
orders (where you set a maximum purchase price or a minimum sale price), write down the price or reerence. e price
and market depth over the time period that the order is let in the market will afect the likelihood o a trade.
• Duration o the order: is your order just or this trading day or, i no trade takes place, do you want your order to remain
in the order book when the market opens the next day or or a urther number o days?
• Brokerage rate and the total transaction cost or the order.
• Buying I you want to invest in shares o “X” Company, you need to:
1. Inorm your Stockbroker o the name o the company, price and amount o shares you want to purchase.
2. e Stockbroker will try and match your order.
3. Once the order is processed, he will inorm you o the shares you were able to purchase at the price you had requested.
Once the buying process is complete, you will:
4. Receive a Bought Note by post.
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• Selling I you want to divest shares o “X” Company, you need to:
1. Inorm your Stockbroker about your divestment - the name o the company, the price and the amount o shares to be
sold.
2. e Stockbroker will try to match your order.
3. I your order is not matched, he will inorm you and negotiate a suitable price. Once the order is matched, it will be
processed.
I the Stockbroker sells your shares, you will:
4. Receive a Sold Note or your transaction.
What are Bought Notes and Sold Notes?Bought Notes and Sold Notes are contract notes or conrmations sent to you by the Stockbroker, i your order results in
a trade. ese notes conrm and are proo that your order was executed and act as evidence that transactions had taken
place with your approval.
ese contract notes are dispatched by the Stockbroker to you, before commencement of the next trading session andinorm you o all the transactions that have taken place in your account on a said date . It is very important to check
the details on the respective Bought Note or Sold Note closely and to save all such paperwork as reerence to crosscheck
your orders and actual purchases.
About the CDS statemente CDS statement is a summary o all the transactions that have taken place in your CDS account and shows you the
remaining share balance.
With this document you can:• Check that your Stockbroker has carried out your instructions to buy/sell shares (as per your Bought/Sold notes); and
• Find out i unauthorized purchases/sales have been made in your CDS account.
A monthly and/or quarterly statement is issued to all active account holders (account holders who have carried out at
least one transaction during a particular month/calendar quarter) at the end o the particular month/calendar quarter.
An annual statement is issued to inactive account holders (account holders who have not carried out transactions
during the year and have balances in their accounts) as at 31st March.
In the event of any discrepancies and unauthorized transactions in your CDS statement:• Immediately lodge a complaint in writing with the Compliance Ocer o your Stockbroker rm.
• I the rm ails to respond to your complaint or delay responding to it, you should inorm the CSE immediately.
• Note that your Bought/Sold Notes will be evidence as to your approved orders against errors/omissions o transactions
made to your CDS account.
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Colombo Stock Exchange - Investing in Shares – A Basic Guide18
Important • Ensure you have provided your correct, current postal address to the Stockbroker and the CDS and that you receive all
Bought/Sold Notes and the CDS statement. I you have not received the said documents within 5 working days, please
inorm your Stockbroker and make a note o your complaint.
• Ensure that you have received and read through your Bought/Sold Notes, and identied dis-similarities when compared
to the notes you manage at home with regard to your transactions on the stock market and/or the CDS account statement
you have received.
• Please ensure your complaints are sent to the Compliance Ocer o the Stockbroker rm sooner rather than later. You,
as an investor, are responsible or your CDS account transactions. I a transaction has occurred without your permission,
please inorm the required authorities immediately.
What are the transaction costs?Transaction costs that you will be paying on a trade are as ollows as at the date o this publication.
Pursuant to the implementation o ATS Version 7, wherein the Board Lot size has been changed to one (01) share, the Borad
o Directors o the CSE and the SEC have approved the removal o the Minimum Brokerage Fee o Rs. 10/- and the Minimum
CDS Fee o Rs. 5/- levied on transactions.
Accordingly, the 0.64% Brokerage Fee and the CDS Fee o 0.024% will be applicable or all transactions upto 50 Mn, withefect rom 10th April 2012.
e ee o Rs. 25/- charge rom Custodian Banks in respect o Custodian trades has been done away with efect rom 19th
March 2012.
Fees for transactions up to Rs. 50.0 Mn
Total Transaction Cost 1.1200%Brokerage Fees 0.6400%
CSE Fees 0.0840%
CDS Fees 0.0240%
SEC Cess 0.0720%
Share Transaction Levy 0.3000%
Fees for transactions over Rs. 50.0 Mn
Total Transaction Cost (Minimum) 0.6125%
Brokerage Fees (Minimum) 0.2000%
CSE Fees 0.0525%
CDS Fees 0.0150%
SEC Cess 0.0450%
Share Transaction Levy 0.3000%
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Colombo Stock Exchange - Investing in Shares – A Basic Guide 19
Your StockbrokerIt is important that you nd a Stockbroker that you are happy with in terms o the service that you are receiving. As you
are allowed to open multiple CDS accounts, changing Stockbrokers would entail completing a new orm to open a CDS
account with a new Stockbroker.
Are you categorized as a Foreign Investor?Foreign Investment in SharesForeign investment in Sri Lanka is permissible or approved country unds, approved regional unds, corporate bodies
incorporated outside Sri Lanka and individual residents outside Sri Lanka (inclusive o Sri Lankans residing outside Sri
Lanka) subject to certain limitations and conditions imposed by the Laws o Sri Lanka.
Who is classed as a Foreign Investor?I you all into any o the categories listed below you would be considered a oreign investor:
• Foreign citizens above 18 years o age (irrespective o whether they are resident in Sri Lanka or overseas).
• Citizens o Sri Lanka who are residing outside Sri Lanka and above 18 years o age.
• Corporate bodies incorporated or established outside Sri Lanka.
• Regional and country unds approved by the SEC.
I you all into any one o the above categories, please note that you must open a Securities Investment Account (SIA)
through a licensed Commercial Bank in Sri Lanka. e SIA is a rupee account through which eligible investors can invest
in Government securities (Treasury Bills and Treasury Bonds), equity capital o companies incorporated in Sri Lanka and
Units o Unit Trust companies in Sri Lanka.
Investors are permitted to invest and repatriate investments in any currency through an SIA, without violating any exchange
control regulations and will not be subject to any taxes.
Please contact a Stockbroker or Custodian as listed rom page 21 onwards on this booklet to seek advice on opening your
SIA and CDS account. I you are already interacting with a licensed Commercial Bank in Sri Lanka, please contact your
relationship manager who would advise you on international banking services that complement your needs, in particular
with respect to services related to opening an SIA.
Important Notes: Change of residency of a CDS Account Holder / opening of accounts fornon-resident Sri Lankans• I an investor requests a change to his/her residential address in the CDS rom Sri Lanka to another country, such
investors are required to open a new CDS account to carry out uture transactions and all such purchases and sales o shares should be operated through an SIA. is new CDS account would be classied by the CDS as a Foreign Individual
account (FI).
• Securities held by an investor prior to becoming a non-resident should be lodged only into an existing CDS account
opened whilst being a resident o Sri Lanka. I such an investor requires to lodge any security/ies held by him/her prior
to becoming a non-resident in the new FI account, he/she should obtain prior written approval rom the Controller o
Exchange and proo o such approval should be orwarded to CDS.
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Colombo Stock Exchange - Investing in Shares – A Basic Guide20
• Transer o securities rom an existing CDS account to a new FI account opened as a non -resident will only be carried out
upon the investor obtaining Exchange Control Approval. As per the Exchange Control Act, repatriation o sales proceeds
o securities in the existing CDS account is subject to Exchange Control Approval.
• It will not be possible to repatriate unds arising out o corporate actions such as Dividends and Capitalisation o
Reserves, applicable to securities held in the resident account unless Exchange Control Approval is obtained.
• Any Rights provisionally allotted in respect o shares in a resident account can be purchased only through a SIA and
deposited to the CDS account opened as a non-resident.
Accordingly a CDS account holder wishing to change his/her residential address from SriLanka to another country needs to provide the following information to the CDS in order to
accommodate the change of address:1. Account opening orm duly signed by the account holder.
2. Proo o current residential status.
3. SIA details with documentary proo.
4. Portolio o shares up to the time o changing the residence.
5. Copy o the passport.
6. Declaration rom the account holder on adherence to Exchange Control Regulations (Form 1 C).
Responsibility of Foreign Investors When investing, you should be aware that you are afected by the laws o the country you reside in. It is your responsibility
to seek advice and comply with the laws o your country o residence.
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Colombo Stock Exchange - Investing in Shares – A Basic Guide 21
ANNEX A : LIST OF STOCKBROKERS AND
CUSTODIAN BANKS
CSE MEMBERS – DEBT & EQUITY
Bartleet Religare Securities (Pvt) Ltd.
“Bartleet House”
65, Braybrooke Place, Colombo 2.
Tel. 5220200 Fax. 2434985
E-mail. [email protected]
Web. www.bartleetstock.com
Kandy Branch Tel. 081-5622779
Matara Branch Tel. 041-5410005-6
Negombo Branch Tel. 031-5677838
Jafna Branch Tel. 021-2221800
Acuity Stockbrokers (Pvt) Ltd.
“Acuity House,”
53, Dharmapala Mawatha, Colombo 3.
Tel. 2206206 Fax. 2206298-9
E-mail. [email protected]
Web. www.acuity.lk
Kandy Branch Tel. 081-2205609
John Keells Stockbrokers (Pvt) Ltd.
130, Glennie Street, Colombo 2.
Tel. 4710721-4, 2338066-7, 2342066-7,
2446694-5, 2439047-8 Fax. 2342068E-mail. [email protected]
Web. www.jksb.com, www.jksbonline.com
www.jksb.keels.lk
Asha Phillip Securities Ltd.
Level 4, “Millennium House”,
46/58, Navam Mawatha, Colombo 2.
Tel. 2429100 Fax. 2429199
E-mail. [email protected]
Web. www.ashaphillip.netMatara Branch Tel. 041-2223240
Kandy Branch Tel. 081-4474118
Kurunegala Branch Tel. 037-4691844
Negombo Branch Tel. 031-2227474
Jafna Branch Tel. 021-2221614
Assetline Securities (Pvt) Ltd.
282, Kaduwela Road, Battaramulla.
Tel. 4700111, 2307366 Fax. 4700112
E-mail. [email protected]
Web. www.dpgsonline.com
Matara Branch Tel. 041-4390766-7Kandy Branch Tel. 081-4481638-9
Kurunegala Branch Tel. 037-4690384
Somerville Stockbrokers (Pvt) Ltd.
137, Vauxhall Street, Colombo 2.
Tel. 2329201-5, 2332827, 2338292-3
Fax. 2338291
E-mail. [email protected]
J B Securities (Pvt) Ltd.150, St. Joseph Street, Colombo 14.
Tel. 2490900, 077-2490900, 077-2490901
Fax. 2430070, 2446085, 2447875
E-mail. [email protected]
Web. www.jbs.lk
Lanka Securities (Pvt) Ltd.
228/2, Galle Road, Colombo 4.
Tel. 4706757, 2554942 Fax. 4706767
E-mail. [email protected]
Web. www.lsl.lk
Kandy Branch Tel. 081-4939206
Kurunegala Branch Tel. 037-4934067
Negombo Branch Tel. 031-4929671
Jafna Branch Tel. 021-4590460
Asia Securities (Pvt) Ltd.
Level 21, West Tower, World Trade Centre,
Echelon Square, Colombo 1.
Tel. 2423905, 5320000 Fax. 2336018
E-mail. [email protected]
Web. www.asiacapital.lk
Kurunegala Branch Tel. 037-5642717
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Colombo Stock Exchange - Investing in Shares – A Basic Guide22
Nation Lanka Equities (Pvt) Ltd.
44, Guild ord Cresent, Colombo 7.
Tel. 4714300, 4714388, 4714389,
0777-891871, 0777-896064 Fax. 2387228
E-mail. [email protected]
Web. www.nlequities.comKurunegala Branch Tel. 037-2220297
Capital TRUST Securities (Pvt) Ltd.
42, Sir Mohamed Macan Markar Mawatha, Colombo 3.
Tel. 5335225 Fax. 5365725
E-mail. [email protected]
Web. www.capitaltrust.lk
Kandy Branch Tel. 081-5626839
Kurunegala Branch Tel. 037-5671403
Matara Branch Tel. 041-5623200Negombo Branch Tel. 031-5675291-4
Jafna Branch Tel. 021-5677001-2
S C Securities (Pvt) Ltd.
2nd Floor, 55, D.R. Wijewardena Mawatha, Colombo 10.
Tel. 4711000 Fax. 2394405
E-mail. [email protected]
Web. www.sampathsecurities.lk
Matara Branch Tel. 041-2220090
Kandy Branch Tel. 081-4474299
CT Smith Stockbrokers (Pvt) Ltd.
4-14, Majestic City, 10, Station Road, Colombo 4.
Tel. 2552290 -4 Fax. 2552289
E-mail. [email protected]
Web. www.ctsmith.lk
D N H Financial (Pvt) Ltd.
Level 16, West Tower, World Trade Centre,
Colombo 1.
Tel. 5700777 Fax. 5736264
E-mail. [email protected]
Web. www.dnhnancial.com
Negombo Branch Tel. 031-5676451
N D B Stockbrokers (Pvt) Ltd.
5th Floor, NDB Building,
40, Navam Mawatha, Colombo 2.
Tel. 2314170-8 Fax. 2314180
E-mail. [email protected]
Web. www.ndbs.lk
CSE TRADING MEMBERS – DEBT & EQUITY
Capital Alliance Securities (Pvt) Ltd.
Level 5, “Millennium House”,
46/58, Navam Mawatha, Colombo 2.
Tel. 2317777 Fax. 2317788
E-mail. [email protected]
Web. www.capitalalliance.lk
Matara Branch Tel. 041-4390610
Negombo Branch Tel. 031-2227843-4Kurunegala Branch Tel. 037-2222034-5
SMB Securities (Pvt) Ltd.
47, Dharmapala Mawatha, Colombo 3.
Tel. 5232091 Fax. 2339292
E-mail. [email protected]
Web. www.smblk.com
Jafna Branch Tel. 071-8736499
First Guardian Equities (Pvt) Ltd.
32nd Floor, East Tower, World Trade Centre, Colombo 1.
Tel. 5884400 Fax. 5884401
E-mail. [email protected]
Web. www.rstguardianequities.com
Taprobane Securities (Pvt) Ltd.
2nd Floor, 10, Gothami Road, Colombo 8.
Tel. 5328200 Fax. 5328277
E-mail. [email protected], [email protected]
Web. www.taprobanestocks.com
Heraymila Securities Ltd.
Level 8, South Wing, “Millennium House”,
46/58, Navam Mawatha, Colombo 2.
Tel. 2359100 Fax. 2305522
E-mail. [email protected]
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Colombo Stock Exchange - Investing in Shares – A Basic Guide 23
IIFL Securities Ceylon (Pvt) Ltd.
27th Floor, East Tower, World Trade Centre, Colombo 1.
Tel. 2333000 Fax. 2333383
E-mail. [email protected]
Web. www.iicap.com
TKS Securities (Pvt) Ltd.
19-01, East Tower, World Trade Centre, Colombo 1.
Tel. 7857799 Fax. 7857857
E-mail. [email protected]
Web. www.tks.lk
SKM Lanka Holdings (Pvt) Ltd.
35/1 Alwis Place, Colombo 3.
Tel. 2344444 Fax. 2434198
E-mail. [email protected] Web. www.skmlankaholdings.com
Jafna Branch Tel. 021-2221596
Richard Pieris Securities (Pvt) Ltd.
69, Hyde Park Corner, Colombo 2.
Tel. 7448900 Fax. 2675064
E-mail. [email protected]
Claridge Stockbrokers (Pvt) Ltd.
10, Gnanartha Pradeepa Mawatha, Colombo 8.
Tel. 2697974 Fax. 2677576
E-mail. [email protected]
Negombo Branch Tel. 031-2236666
New World Securities (Pvt) Ltd.
2nd Floor, 45/2, Braybrooke Street, Colombo 2.
Tel. 2358700-20 Fax. 2358701
E-mail. [email protected]
Web. www.nws.lk
Arrenga Capital (Pvt) Ltd.Level 23, East Tower, World Trade Centre, Colombo 1.
Tel. 7277000-98 Fax. 7277099
E-mail. [email protected]
Web. www.arrengacapital.com
LOLC Securities Ltd.
Level 18, West Tower, World Trade Center,
Echelon Square, Colombo 1.
Tel. 7880880 Fax. 2434771
Kurunegala Branch Tel. 037-7201221
CSE MEMBERS – DEBT
First Capital Markets Ltd.
75, Arnold Ratnayake Mawatha, Colombo 10.
Tel. 2639898, 2681888 Fax. 2639899, 2681460
E-mail. [email protected]
Web. www.rstcapital.lk
Kandy Branch Tel. 081-2236010
Matara Branch Tel. 041-2222988
Kurunegala Branch Tel. 037-2222930
COMMERCIAL BANKS OFFERING CUSTODIAN
SERVICES
Bank of Ceylon
11th Floor, 4, Bank o Ceylon Mawatha, Colombo 1.
Tel. 2448348
Web. www.boc.lk
Standard Chartered Bank
37, York Street, Colombo 1.
Tel. 2480450 Web. www.standardchartered.com
Banque Indosuez
C/o Hatton National Bank Ltd. Cinnamon Gardens Branch,
251, Dharmapala Mawatha, Colombo 7.
Tel. 2681720, 2686537
Sampath Bank Ltd.
110, Sir James Peiris Mawatha, Colombo 2.
Tel. 5331458, 4730662
Web. www.sampath.lk
Citibank N.A.
65 C, Dharmapala Mawatha, Colombo 7.
Tel. 2447316-8, 2449061
Web. www.citi.com
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Colombo Stock Exchange - Investing in Shares – A Basic Guide24
Union Bank of Colombo Ltd.
15 A, Alred Place, Colombo 3.
Tel. 2370870
Web. www.unionb.com
Deutsche Bank 86, Galle Road, Colombo 3.
Tel. 2447062, 2438220, 2438057
Web. www.db.com/srilanka
Nations Trust Bank Ltd.
242, Union Place, Colombo 2.
Tel. 4313131
Web. www.nationstrust.com
Hatton National Bank Ltd.
10, R. A. De Mel Mawatha, Colombo 3.
Tel. 2664664
Web. www.hnb.net
Seylan Bank Ltd.
Level 8, Ceylinco Seylan Towers,
90, Galle Road, Colombo 3.
Tel. 4701812, 4701819
Web. www.eseylan.com
Hongkong & Shanghai Banking Corp. Ltd.24, Sir Baron Jayathilake Mawatha, Colombo 1.
Tel. 2325435, 2446591, 2446303
E-mail. [email protected]
Web. www.hsbc.lk
State Bank of India
16, Sir Baron Jayathilake Mawatha., P.O. Box 93, Colombo 1.
Tel. 2380953, 2326133-5
Web. www.statebankondia.com
People’s Bank
Financial & Management Accounting Department,
75, Sir Chittampalam A. Gardiner Mawatha, Colombo 2.
Tel. 2481397, 2432437
Web. www.peoplesbank.lk
Commercial Bank of Ceylon Ltd.
“Commercial House”
21, Bristol Street, Colombo 1.
Tel. 5377881, 2440010-15
Web. www.combank.net
National Savings Bank
“Savings House”
255, Galle Road, Colombo 3.
Tel. 2573008-15
Web. www.nsb.lk
Pan Asia Bank
450, Galle Road, Colombo 3.
Tel. 2565565
Web. www.pabcbank.com
Public Bank Berhad
P. O. BOX 1995, 340, R.A De Mel Mawatha,
Colombo 3.
Tel. 2576289-92
Fax. 2573958
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Colombo Stock Exchange - Investing in Shares – A Basic Guide 25
ANNEX B : STATISTICAL DATA
Selected highlights o the equity market segment o the Colombo Stock Exchange or the period 2010-2012(Q1) are
provided below:
* Calculated on an annual basis
** 01st January to 31st March 2012
*** Value as at 31st March 2012
Market Highlights 2012 (Q1) 2011 2010Equity Turnover (Rs. Mn) 81,709.9 546,255.8 570,326.8
Domestic (Rs. Mn) 61,434.7 486,959.4 464,733.6
Foreign (Rs. Mn) 20,275.2 59,296.4 105,593.2
Daily Average Turnover (Rs. Mn) 1,361.8 2,285.6 2,396.3
Shares Traded (No. Mn) 2,577.5 24,543.7 18,489.2
Domestic (No. Mn) 2,350.6 23,151.6 16,684.5
Foreign (No. Mn) 226.9 1,392.1 1,804.7
Trades (No.) 550,710 4,579,352 3,355,126
Domestic (No.) 532,876 4,463,404 3,225,041
Foreign (No.) 17,834 115,948 130,085
Market Capitalization (Rs. Bn) 2,012.9 2,213.9 2,210.5
Market Capitalization as a % o GDP * 33.8 39.5
Turnover Velocity (%) * 24.7 34.5
Initial Capital Raised (Rs.Bn) 1.3 19.2 4.3
New Listings (No.) 6 31 10
Foreign Trading Activity
Annual Turnover (Rs.Mn) 20,275.2 59,296.4 105,593.2
Purchases (Rs. Mn.) 30,436.2 49,776.8 92,425.5
Sales (Rs. Mn.) 10,114.1 68,816.0 118,760.9
Net Foreign Flow (Rs. Mn) 20,332.1 (19,039.2) (26,335.3)
Returns, Yields and Valuation Multiples
All Share Price Index 5,420.2 6,074.4 6,635.9
Y-O-Y Change (%) (10.8)** (8.5) 96.0
Milanka Price Index 4,891.6 5,229.2 7,061.5
Y-O-Y Change (%) (6.5)** (25.9) 83.4
Market PER Year End (Times) 14.4*** 15.8 25.2
Price to Book Value Year End(Times) 1.8*** 2.0 3.0
Dividend Yield Year End (%) 1.9*** 1.8 1.2
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Colombo Stock Exchange - Investing in Shares – A Basic Guide26
BANKS , FINANCE & INSURANCE HEALTH CARE
Commercial Bank o Ceylon PLC e Lanka Hospitals Corporation PLC
Central Finance Company PLC
DFCC Bank
Hatton National Bank PLC
Lanka Orix Leasing Company PLC
LB Finance PLC
Nations Trust Bank PLC
Sampath Bank PLC
Union Bank o Colombo PLC
BEVERAGES , FOOD & TOBACCO INVESTMENT TRUSTS
Distilleries Company o Sri Lanka PLC Environmental Resources Investment PLC
DIVERSIFIED LAND & PROPERTY
Aitken Spence PLC Colombo Land and Development Company PLC
Free Lanka Capital Holdings PLC
John Keells Holdings PLC
Richard Pieris and Company PLC
e Colombo Fort Land and Building Company PLC
Vallibel One PLC
Sotlogic Holdings PLC
MANUFACTURING TRADING
Ceylon Grain Elevators PLC Brown & Company PLC
Piramal Glass Ceylon PLC
Royal Ceramics Lanka PLC
POWER & ENERGY
Laugs Gas PLC
Milanka Price Index Companies for the 1st Half, 2012
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Colombo Stock Exchange - Investing in Shares – A Basic Guide 27
Notes
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Notes
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Disclaimer
is booklet has been prepared by the CSE in good faith, solely for educational purposes. us, the information contained herein is general in nature and shouldnot be treated as legal advice, tax advice, investment advice or recommendationsto buy or sell shares. e reader should seek independent professional advice withregard to legal, tax and investment matters.
Whilst reasonable eorts have been made to include accurate and up-to-dateinformation in the booklet, the CSE does not make any warranties or representa-
tions regarding the accuracy, adequacy, reliability and completeness of theinformation.
erefore, the CSE and its employees disclaim all liability for any loss suered(directly or indirectly) by any person acting in reliance upon the informationcontained herein.
If you need any further information to get started, please contact the
Market Development Division of the Colombo Stock Exchange:
Mail : Colombo Stock Exchange
#04-01 West Block
World Trade Centre
Echelon Square
Colombo 01
Sri Lanka
Call : + 94 11 2356456
+ 94 11 2446581
Fax : + 94 11 2445279Email : [email protected]
Web : www.cse.lk
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