Share trading in Sri Lanka was initiated in 1896 under the Share Brokers Association (SBA). The Colombo Brokers' Association began auctioning land shares in 1904 and gradually became the SBA's competitor. The two organizations combined to form the Colombo Securities Exchange in 1985.
The establishment of a formal stock exchange took place in 1985 with the incorporation of the Colombo Stock Exchange (CSE), which took over the Stock Market from the Colombo Share Brokers Association. It currently has a membership of 15 institutions, all of which are licensed to operate as stockbrokers.[3][full citation needed]
The company was renamed the Colombo Stock Exchange in 1990. The CSE introduced the Central Depository System, which automated clearing. The CSE headquarters opened in World Trade Center Colombo in 1995.[3][full citation needed] The Milanka Price Index (MPI) of the CSE's 25 best-performing stocks was introduced in 1999. Several regional CSE branches were opened within the country, at Kandy, Jaffna, Ambalantota, Matara, Kurunegala, Anuradhapura and Ratnapura.
Post-ceasefire boomEdit
After mediocre performance throughout the 1990s mainly due to the Sri Lankan Civil War, the ceasefire agreement signed in 2001 saw unprecedented growth in both indices of the CSE. The All Share Price Index (ASPI), which was hovering around the 500 mark in August 2001, surpassed the 2000 mark.[citation needed]
This led CSE to be consistently dubbed one of the best-performing markets in the world.[citation needed] From 2002 to 2005, the CSE recorded a consistent annual growth of over 30% in the ASPI. It surpassed that in 2006, with the ASPI growing by 41.6%[6] and the MPI growing by 51.4%[7] during that calendar year. CSE recorded its highest point on 26 February 2007, when the MPI reached 4,214.8 points.[8]
Buoyed by improved investor confidence due to political developments and strong corporate results[6] the CSE continued to achieve high growth in 2007, as the ASPI passed the 3,000 mark for the first time on 13 February,[6][7][9] reaching a series of record highs across seven consecutive days.[7] The CSE also recorded an average daily turnover of SL Rs. 776.8 million for 2007.[9]
Post war boomEdit
After the end of the Sri Lankan Civil War on 18 May 2009, CSE indexes increased rapidly, setting new records. Market capitalization set a record high on 6 October 2009 as the CSE reached the SL Rs. 1 trillion mark for the first time.[10] ASPI set a record of 3549.27 points on 11 January 2010.[11] CSE was the best performing stock exchange in the world in 2009 as it jumped 125.2 percent during that year.[12]
Recent yearsEdit
CSE transferred nine traded companies to their Watch List[clarification needed] with effect from 7 June 2018 due to their failure to submit quarterly financial statements.[13][relevant?]
The CSE made a statement that investment flows from the Scandinavian region to Sri Lankan stocks had improved in recent years, where inward investments have grown by 39 percent per annum (CAGR) since 2013. According to a CSE statement, Scandinavian countries have collectively invested SL Rs. 8.2 billion in local equities year-to-date, which amounted to 23 percent of the total foreign purchases during the period.[14][15]
The National Stock Exchange (NSE) and the CSE signed an agreement to explore opportunities to work together and foster a strategic relationship. The agreement is intended for cooperation on the exchange of information and expertise and also paves the way for the NSE to play a consultative role in a number of strategic initiatives implemented by the CSE, including new product development and exchange operations.[16]
The CSE launched a guide to help listed Sri Lankan companies address environmental, social and corporate governance (ESG) factors in their capital market communications.
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