Foreign shareholding in CSE declines

The volume of securities held by foreign investors at the Central Depository System (CDS) of the Colombo Stock Exchange (CSE) has dropped by 641.8 million up to October this year while securities held by the domestic investors has increased by 15.77 billion. 

Colombo Stock Exchange (CSE)

As of end-October, total securities held by both foreigners and locals stood at 114.33 billion, compared to 99.2 billion on 31 December 2019. From the October figure, 26.22 billion securities were held by foreigners compared to 26.86 billion in December while the rest, 88.11 billion securities, were held by locals compared to 72.33 billion as of end-December. 

Even though foreign securities grew to 26.9 billion in January this year from 26.86 billion in December, it recorded a drop of 26.88 billion in February and it dropped further to 26.82 billion in March, during the time Sri Lanka detected its first national case of Covid-19. Following which, the Government swiftly announced a seven-week long islandwide lockdown and it is notable that during this lockdown period, the CSE too shut down its trading. 

In the days leading up to the initial closure of the CSE on 16 March, the CSE’s circuit breaker was activated multiple times after the Standard and Poor’s Sri Lanka 20 (S&P SL20) index, which includes the 20 largest companies by total market capitalisation listed on the CSE, fell by 5% slabs several times, triggering 30-minute halts in regular trading. The following week, it remained closed for four days with the Government declaring holidays. It was opened only on Friday (20 March) that week and that too for a shortened trading time. The stock market was opened again only on 11 May.   

In May, total securities held by both foreigners and locals increased to 103.9 billion from 99.4 billion in March, before the lockdown. Even though the total securities figure witnessed an increase, it was driven only by securities held by locals as it increased to 77.26 billion from 72.65 billion, a remarkable growth. Nevertheless, securities held by foreigners continued to record a declining trend with the volume of securities dropping to 26.67 billion from 26.82 billion in March. 

Since then, securities held by foreigners have been on the decline as it dropped to 26.53 billion, 26.42 billion, and 26.22 billion, respectively, in June, July, and October this year. Regardless of decreasing foreign securities, the total number of securities held by both foreigners and locals have been up and above the 100 billion mark since the reopening of the market in May. This is because domestic contribution remained well above 77 billion mark since May as domestic securities were 77.11 billion and 77.23 billion, respectively, in June and July. As of end-October, securities held by locals shot up to 88.11 billion, a significant growth since the reopening of the market. 

From the market reopening to 31 October, securities held by locals grew significantly by 10.84 billion while securities held by foreigners dropped by 447.19 million.