The Investor Sentiment - Equity and investments forum for Sri Lankans



Join the forum, it's quick and easy

The Investor Sentiment - Equity and investments forum for Sri Lankans

The Investor Sentiment - Equity and investments forum for Sri Lankans

Would you like to react to this message? Create an account in a few clicks or log in to continue.
The Investor Sentiment - Equity and investments forum for Sri Lankans

The Lankan Investor Forum - A more respectable and reasonable place for members to discuss matters regarding the CSEThe Lankan Investor Forum - A more respectable and reasonable place for members to discuss matters regarding the CSE

Please send an email to contact.lankaninvestor@gmail.com if you face any technical difficulties when posting

Latest topics

» CIFC Dumps to Expand Your Possibilities to Pass Your Exam
Investing public funds in the stock market EmptyFri Jul 19, 2024 10:30 am by faithhharris

» CCS.N0000 ( Ceylon Cold Stores)
Investing public funds in the stock market EmptyWed Mar 20, 2024 11:31 am by Hawk Eye

» Sri Lanka plans to allow tourists from August, no mandatory quarantine
Investing public funds in the stock market EmptyWed Sep 13, 2023 12:16 pm by lauryfriese

» When Will It Be Safe To Invest In The Stock Market Again?
Investing public funds in the stock market EmptyWed Apr 19, 2023 6:41 am by කිත්සිරි ද සිල්වා

» Dividend Announcements
Investing public funds in the stock market EmptyWed Apr 12, 2023 5:41 pm by කිත්සිරි ද සිල්වා

» MAINTENANCE NOTICE / නඩත්තු දැනුම්දීම
Investing public funds in the stock market EmptyThu Apr 06, 2023 3:18 pm by කිත්සිරි ද සිල්වා

» ඩොලර් මිලියනයක මුදල් සම්මානයක් සහ “ෆීල්ඩ්ස් පදක්කම” පිළිගැනීම ප්‍රතික්ෂේප කළ ගණිතඥයා
Investing public funds in the stock market EmptySun Apr 02, 2023 7:28 am by කිත්සිරි ද සිල්වා

» SEYB.N0000 (Seylan Bank PLC)
Investing public funds in the stock market EmptyThu Mar 30, 2023 9:25 am by yellow knife

» Here's what blind prophet Baba Vanga predicted for 2016 and beyond: It's not good
Investing public funds in the stock market EmptyThu Mar 30, 2023 9:25 am by HaeroMaero

» The Korean Way !
Investing public funds in the stock market EmptyWed Mar 29, 2023 7:09 am by කිත්සිරි ද සිල්වා

» In the Meantime Within Our Shores!
Investing public funds in the stock market EmptyMon Mar 27, 2023 5:51 pm by කිත්සිරි ද සිල්වා

» What is Known as Dementia?
Investing public funds in the stock market EmptyFri Mar 24, 2023 10:09 am by කිත්සිරි ද සිල්වා

» SRI LANKA TELECOM PLC (SLTL.N0000)
Investing public funds in the stock market EmptyMon Mar 20, 2023 5:18 pm by කිත්සිරි ද සිල්වා

» THE LANKA HOSPITALS CORPORATION PLC (LHCL.N0000)
Investing public funds in the stock market EmptyMon Mar 20, 2023 5:10 pm by කිත්සිරි ද සිල්වා

» Equinox ( වසන්ත විෂුවය ) !
Investing public funds in the stock market EmptyMon Mar 20, 2023 4:28 pm by කිත්සිරි ද සිල්වා

» COMB.N0000 (Commercial Bank of Ceylon PLC)
Investing public funds in the stock market EmptySun Mar 19, 2023 4:11 pm by කිත්සිරි ද සිල්වා

» REXP.N0000 (Richard Pieris Exports PLC)
Investing public funds in the stock market EmptySun Mar 19, 2023 4:02 pm by කිත්සිරි ද සිල්වා

» RICH.N0000 (Richard Pieris and Company PLC)
Investing public funds in the stock market EmptySun Mar 19, 2023 3:53 pm by කිත්සිරි ද සිල්වා

» Do You Have Computer Vision Syndrome?
Investing public funds in the stock market EmptySat Mar 18, 2023 7:36 am by කිත්සිරි ද සිල්වා

» LAXAPANA BATTERIES PLC (LITE.N0000)
Investing public funds in the stock market EmptyThu Mar 16, 2023 11:23 am by කිත්සිරි ද සිල්වා

» What a Bank Run ?
Investing public funds in the stock market EmptyWed Mar 15, 2023 5:33 pm by කිත්සිරි ද සිල්වා

» 104 Technical trading experiments by HUNTER
Investing public funds in the stock market EmptyWed Mar 15, 2023 4:27 pm by katesmith1304

» GLAS.N0000 (Piramal Glass Ceylon PLC)
Investing public funds in the stock market EmptyWed Mar 15, 2023 7:45 am by කිත්සිරි ද සිල්වා

» Cboe Volatility Index
Investing public funds in the stock market EmptyTue Mar 14, 2023 5:32 pm by කිත්සිරි ද සිල්වා

» AHPL.N0000
Investing public funds in the stock market EmptySun Mar 12, 2023 4:46 pm by කිත්සිරි ද සිල්වා

» TJL.N0000 (Tee Jey Lanka PLC.)
Investing public funds in the stock market EmptySun Mar 12, 2023 4:43 pm by කිත්සිරි ද සිල්වා

» CTBL.N0000 ( CEYLON TEA BROKERS PLC)
Investing public funds in the stock market EmptySun Mar 12, 2023 4:41 pm by කිත්සිරි ද සිල්වා

» COMMERCIAL DEVELOPMENT COMPANY PLC (COMD. N.0000))
Investing public funds in the stock market EmptyFri Mar 10, 2023 4:43 pm by yellow knife

» Bitcoin and Cryptocurrency
Investing public funds in the stock market EmptyFri Mar 10, 2023 1:47 pm by කිත්සිරි ද සිල්වා

» CSD.N0000 (Seylan Developments PLC)
Investing public funds in the stock market EmptyFri Mar 10, 2023 10:38 am by yellow knife

» PLC.N0000 (People's Leasing and Finance PLC)
Investing public funds in the stock market EmptyThu Mar 09, 2023 8:02 am by කිත්සිරි ද සිල්වා

» Bakery Products ?
Investing public funds in the stock market EmptyWed Mar 08, 2023 5:30 pm by කිත්සිරි ද සිල්වා

» NTB.N0000 (Nations Trust Bank PLC)
Investing public funds in the stock market EmptySun Mar 05, 2023 7:24 am by කිත්සිරි ද සිල්වා

» Going South
Investing public funds in the stock market EmptySat Mar 04, 2023 10:47 am by කිත්සිරි ද සිල්වා

» When Seagulls Follow the Trawler
Investing public funds in the stock market EmptyThu Mar 02, 2023 10:22 am by කිත්සිරි ද සිල්වා

» Re-activating
Investing public funds in the stock market EmptySat Feb 25, 2023 5:12 pm by කිත්සිරි ද සිල්වා

» අපි තමයි හොඳටම කරේ !
Investing public funds in the stock market EmptyTue Feb 14, 2023 3:54 pm by ruwan326

» මේ අර් බුධය කිසිසේත්ම මා විසින් නිර්මාණය කල එකක් නොවේ
Investing public funds in the stock market EmptyTue Jan 03, 2023 6:43 pm by ruwan326

» SAMP.N0000 (Sampath Bank PLC)
Investing public funds in the stock market EmptyWed Nov 30, 2022 8:24 am by කිත්සිරි ද සිල්වා

» APLA.N0000 (ACL Plastics PLC)
Investing public funds in the stock market EmptyFri Nov 18, 2022 7:49 am by කිත්සිරි ද සිල්වා

» AVOID FALLING INTO ALLURING WEEKEND FAMILY PACKAGES.
Investing public funds in the stock market EmptyWed Nov 16, 2022 9:28 pm by කිත්සිරි ද සිල්වා

» Banks, Finance & Insurance Sector Chart
Investing public funds in the stock market EmptyTue Nov 15, 2022 5:26 pm by කිත්සිරි ද සිල්වා

» VPEL.N0000 (Vallibel Power Erathna PLC)
Investing public funds in the stock market EmptySun Nov 13, 2022 12:15 pm by කිත්සිරි ද සිල්වා

» DEADLY COCKTAIL OF ISLAND MENTALITY AND PARANOID PERSONALITY DISORDER MIX.
Investing public funds in the stock market EmptyMon Nov 07, 2022 6:36 pm by කිත්සිරි ද සිල්වා

» WATA - Watawala
Investing public funds in the stock market EmptySat Nov 05, 2022 8:44 am by කිත්සිරි ද සිල්වා

» KFP.N0000(Keels Food Products PLC)
Investing public funds in the stock market EmptySat Nov 05, 2022 8:42 am by කිත්සිරි ද සිල්වා

» Capital Trust Broker in difficulty?
Investing public funds in the stock market EmptyFri Oct 21, 2022 5:25 pm by කිත්සිරි ද සිල්වා

» IS PIRATING INTELLECTUAL PROPERTY A BOON OR BANE?
Investing public funds in the stock market EmptyThu Oct 20, 2022 10:13 am by කිත්සිරි ද සිල්වා

» What Industry Would You Choose to Focus?
Investing public funds in the stock market EmptyTue Oct 11, 2022 6:39 pm by කිත්සිරි ද සිල්වා

» Should I Stick Around, or Should I Follow Others' Lead?
Investing public funds in the stock market EmptyTue Oct 11, 2022 9:07 am by කිත්සිරි ද සිල්වා

Disclaimer


Information posted in this forum are entirely of the respective members' personal views. The views posted on this open online forum of contributors do not constitute a recommendation buy or sell. The site nor the connected parties will be responsible for the posts posted on the forum and will take best possible action to remove any unlawful or inappropriate posts.
All rights to articles of value authored by members posted on the forum belong to the respective authors. Re-using without the consent of the authors is prohibited. Due credit with links to original source should be given when quoting content from the forum.
This is an educational portal and not one that gives recommendations. Please obtain investment advises from a Registered Investment Advisor through a stock broker


    Investing public funds in the stock market

    Sriranga
    Sriranga
    Veteran
    Veteran


    Posts : 3226
    Join date : 2014-02-23
    Location : Colombo

    Investing public funds in the stock market Empty Investing public funds in the stock market

    Post by Sriranga Sat Jun 07, 2014 9:47 pm

    From Sunday Island 08/06/2014

    The Employees Provident Fund (EPF), the retirement fund of private sector employees to which their employers and they themselves make monthly contributions, today controls a massive Rs. 1,300 billion. It is certainly no Golden Key and however much some of its stock market investments may be kept in the public eye by opposition MP Harsha de Silva, once labeled the UNP’s ``economic hit man’’ by Governor Cabraal, nobody can credibly say that its 2.4 million members have fears of not getting their money when they want it. The fund, for which the Labour Department too has a statutory responsibility, is administered by the Central Bank and our sister paper, The Island, last week ran an interview with Governor Ajith Nivard Cabraal on the many issues that de Silva, functioning as a good opposition parliamentarian should, keeps raising frequently.

    Any stock market investor would (or should) know you cannot win on all the share market investments you make unless you are a genius blessed with a canny instinct that unerringly takes you where the big bucks are. But they also know that if they are patient and resource rich, and not inclined to gamble on shares which lack fundamental strength, they generally cannot go wrong and can make good profits for themselves as many do. Given its resource base, the EPF which for long was a captive lender to government, can make good profits for its members by prudent stock market investment. Time was when the dividend on members’ balances was less than prevailing inflation rates and EPF members were actually losers on their money held in the fund. But that ended many years ago and for the past several years, the fund has been giving its members a decent return and also regularly posting them on their balances held in the fund. A few people may have trouble getting their EPF savings refunded, but that has nothing to do with the fund not having the ability to meet calls on it. It has everything to do with the necessary documentation not being in order and neither the fund nor its administrators can be blamed for that. They must necessarily make sure that the money goes to people to whom it belongs and no other and berating them for doing that serve no useful purpose.

    In his interview with The Island Cabraal has said that until around 2001, the EPF invested all its resources in government securities - the so-called gilts. The decision to invest in the equity market was taken at that time. However, even up to now only a very small percentage of the EPF’s holdings is invested in equity – less than six percent (Rs. 72 billion) in shares. But the governor says that the fiscal debt is being progressively reduced today and he foresees that government borrowing will decline in the future. To borrow his words, ``the EPF is one of the biggest lenders to the government and the biggest borrower of EPF money has clearly indicated that they may not borrow as much in the future.’’ Added to that is the fact that interest rates have been coming down and the halcyon days when the National Savings Bank paid 22 percent on one year fixed deposits when the J.R. Jayewardene government in 1978 opened an economy shackled for decades is long gone. Today bank deposit rates are in single digits. It is possible to get more from finance companies but the good ones barely offer 11 percent at present. Given the unhappy experiences many investors have had with fly-by-night financial sector borrowers, the Central Bank has capped interest rates that can be paid but allowed some flexibility which has enabled some companies to offer a slightly better rate for 13-month maturities rather than the usual 12-months.

    Be that as it may, many middle class people, most of them in the twilight years of their lives, are hard hit by the falling deposit rates both in banks and in finance companies. There is little or nothing the government can do about this because it cannot force situations where companies are made to pay deposit rates higher than the rates at which they can lend. Greater the risk, greater the reward is a proven economic maxim. People flocked to Golden Key to get crazily high interest rates and are paying the price despite previously bad market experiences. The Central Bank (CB) is now in the process of trying to reduce the number of finance companies in operation by pushing the stronger entities to absorb the weaker one. It must be faulted for allowing new finance companies to open in a market which was already saturated and then trying (in a fashion) to `compel’ mergers and acquisitions under conditions including keeping all present employees in their jobs – no doubt a political imperative. The CB must blame itself for issuing new licences in this context.

    Recently the Chairman of the Ceylon Tobacco Company said in its annual report that if a shareholder had invested a thousand rupees in CTC shares on January 1, 2009, and sold these shares on December 31, 2013, his/her total return would have been Rs. 23,596 including share price appreciation and dividends, providing a total gain of 2,260 percent!

    Given that CTC is the manufacturer of a controversial product, it is unlikely that the EPF would have cashed in on such investment opportunities, however seductive. Admittedly an exception, it is yet an indication of the possibilities of investing in listed shares. There are quite a few companies like CTC who have given exceptional returns to their shareholders who have done very nicely in terms of both high dividends and capital appreciation. The EPF is a substantial shareholder of many such companies particularly in the banking sector. Yet it has been pointed out to Cabraal that the return on share investments by the fund in the last three years, both in terms of dividends and capital gains realized, had been 3.2%, 4.8% and 4.5% against 11% and more from government securities. So why invest in shares, the governor was asked.

    His response has been logical. The share portfolio of the EPF was relatively young while its government securities portfolio is mature, still holding treasury bonds issued years ago and earning high interest. So the 11% will not be a permanent feature and it is necessary that the fund builds a good portfolio of shares as well which in the future will provide a reasonable return to members. The government today, using the influence of share portfolios held not only by the EPF but also by the Employees Trust Fund and the Sri Lanka Insurance Corporation, which went into stock market investments much earlier, have been making board appointments to listed banks among others. While many such appointments are good, there have been at least a few that are questionable. Today a place on the board of many blue chip companies, even in an independent non-executive capacity, entails better than six figure monthly emoluments. This is an instrument of patronage that most politicians would be tempted to use. As long as there are no investments in crony companies, and there have been some such, prudently diversifying the EPF portfolio into companies with strong fundamentals must be encouraged. We also need MPs like Harsha de Silva to keep their eyes peeled on the way the game is played.
    http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=104731

      Current date/time is Tue Dec 10, 2024 6:01 pm