CSE Guide Book English

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INVESTING IN SHARES

A BASIC GUIDE



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



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.




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




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




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%




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.




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.




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.




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.




• 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.




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).




• 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.




• 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.




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.




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.




• 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.




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%




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.




• 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.




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


Web. www.acuity.lk


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


Web. www.ashaphillip.netMatara Branch Tel. 041-2223240


Kurunegala Branch Tel. 037-4691844



Assetline Securities (Pvt) Ltd.

282, Kaduwela Road, Battaramulla.

Tel. 4700111, 2307366 Fax. 4700112


Web. www.dpgsonline.com

Matara Branch Tel. 041-4390766-7Kandy Branch Tel. 081-4481638-9


Somerville Stockbrokers (Pvt) Ltd.

137, Vauxhall Street, Colombo 2.

Tel. 2329201-5, 2332827, 2338292-3

Fax. 2338291


J B Securities (Pvt) Ltd.150, St. Joseph Street, Colombo 14.

Tel. 2490900, 077-2490900, 077-2490901

Fax. 2430070, 2446085, 2447875


Web. www.jbs.lk

Lanka Securities (Pvt) Ltd.

228/2, Galle Road, Colombo 4.

Tel. 4706757, 2554942 Fax. 4706767


Web. www.lsl.lk





Asia Securities (Pvt) Ltd.

Level 21, West Tower, World Trade Centre,

Echelon Square, Colombo 1.

Tel. 2423905, 5320000 Fax. 2336018


Web. www.asiacapital.lk





Nation Lanka Equities (Pvt) Ltd.

44, Guild ord Cresent, Colombo 7.

Tel. 4714300, 4714388, 4714389,

0777-891871, 0777-896064 Fax. 2387228


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


Web. www.capitaltrust.lk



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


Web. www.sampathsecurities.lk

Matara Branch Tel. 041-2220090


CT Smith Stockbrokers (Pvt) Ltd.

4-14, Majestic City, 10, Station Road, Colombo 4.

Tel. 2552290 -4 Fax. 2552289


Web. www.ctsmith.lk

D N H Financial (Pvt) Ltd.

Level 16, West Tower, World Trade Centre,

Colombo 1.

Tel. 5700777 Fax. 5736264


Web. www.dnhnancial.com


N D B Stockbrokers (Pvt) Ltd.

5th Floor, NDB Building,

40, Navam Mawatha, Colombo 2.

Tel. 2314170-8 Fax. 2314180


Web. www.ndbs.lk

CSE TRADING MEMBERS – DEBT & EQUITY

Capital Alliance Securities (Pvt) Ltd.

Level 5, “Millennium House”,


Tel. 2317777 Fax. 2317788


Web. www.capitalalliance.lk


Negombo Branch Tel. 031-2227843-4Kurunegala Branch Tel. 037-2222034-5

SMB Securities (Pvt) Ltd.


Tel. 5232091 Fax. 2339292


Web. www.smblk.com


First Guardian Equities (Pvt) Ltd.

32nd Floor, East Tower, World Trade Centre, Colombo 1.

Tel. 5884400 Fax. 5884401


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”,


Tel. 2359100 Fax. 2305522





IIFL Securities Ceylon (Pvt) Ltd.

27th Floor, East Tower, World Trade Centre, Colombo 1.

Tel. 2333000 Fax. 2333383


Web. www.iicap.com

TKS Securities (Pvt) Ltd.

19-01, East Tower, World Trade Centre, Colombo 1.

Tel. 7857799 Fax. 7857857


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


Richard Pieris Securities (Pvt) Ltd.

69, Hyde Park Corner, Colombo 2.

Tel. 7448900 Fax. 2675064


Claridge Stockbrokers (Pvt) Ltd.

10, Gnanartha Pradeepa Mawatha, Colombo 8.

Tel. 2697974 Fax. 2677576



New World Securities (Pvt) Ltd.

2nd Floor, 45/2, Braybrooke Street, Colombo 2.

Tel. 2358700-20 Fax. 2358701


Web. www.nws.lk

Arrenga Capital (Pvt) Ltd.Level 23, East Tower, World Trade Centre, Colombo 1.

Tel. 7277000-98 Fax. 7277099


Web. www.arrengacapital.com

LOLC Securities Ltd.

Level 18, West Tower, World Trade Center,

Echelon Square, Colombo 1.

Tel. 7880880 Fax. 2434771


CSE MEMBERS – DEBT

First Capital Markets Ltd.

75, Arnold Ratnayake Mawatha, Colombo 10.

Tel. 2639898, 2681888 Fax. 2639899, 2681460


Web. www.rstcapital.lk




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,


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




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


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”


Tel. 2573008-15

Web. www.nsb.lk

Pan Asia Bank


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




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




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




Notes



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

CSE Guide Book English

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