Capital markets play a quiet but vital role in national development. For individuals, they turn savings into ownership, which in turn becomes long-term financial security. With time and discipline, market-linked investments help people build wealth towards life goals like retirement. The value also flows in the other direction, towards companies as well. The market serves as a channel for raising capital to fund expansion, innovation, and modernise operations. In doing so, they contribute to economic growth, with more jobs and higher tax contributions, while delivering value to shareholders.
“As the economy stabilises under the IMF programme the Sri Lankan capital market is ripe with opportunity.”
To make this exchange of value more inclusive and resilient, the Colombo Stock Exchange (CSE) is focused on expanding access, improving transparency, and building investor confidence. Reforms have strengthened the system, education is widening participation, and long-term trust is becoming central to how the market operates. Dimuthu Abeyesekera, Chairman of the Colombo Stock Exchange, shares how capital markets enable national progress while empowering corporations and individuals.
What do you see as the biggest opportunities and challenges currently facing the Sri Lankan capital market?
As the economy stabilises under the IMF programme the Sri Lankan capital market is ripe with opportunity. Interest rates have dropped to single digits, lowering borrowing costs, raising corporate performance and thus producing stronger earnings. Market valuations remain low. As of 26 September 2025, the CSE trades at a P/E of 9.51x, compared with India’s SENSEX at 23.23x and Thailand at 14.8x, making Sri Lanka one of the more attractively valued markets in the region. These conditions create space for new listings as we see growing interest from private firms and anticipate the likely entry of state-owned enterprises into the market as part of broader economic reforms. The challenge we face is investor participation, as currently there are approximately 50,000 active investors representing only 0.2% of the nation’s total population.
The opportunities, however, for companies to raise capital are abundant as the economy is projected to grow between 4.5% and 5%. In support, the Colombo Stock Exchange (CSE) has introduced a range of products. For companies interested in raising debt, a variety of instruments are available, including sustainability bonds such as green, blue, and social bonds, as well as Shariah-compliant options like sukuk, among others. For equity, the CSE offers multiple boards tailored for different entities. Main Board for large-cap companies, Diri Savi Board for mid-sized and growing companies, Empower Board for small and medium-sized enterprises (SMEs), Catalyst Board for state-owned enterprises (SOEs), Dollar-Denominated Board for foreign companies to list their securities and for foreign investors to trade in USD-denominated assets. These initiatives, designed to provide companies with flexible financing options, can attract a diverse investor base. If we can expand participation while broadening opportunities, then the capital market will play a pivotal role in financing growth and helping more Sri Lankans build wealth.
In your opinion, why should stock market investing be viewed as a core component of long-term financial planning?
Stock market investing deserves a place in anyone’s long-term financial planning because it offers growth that few other assets match. Over the past five years, the market has delivered a compound annual growth rate of 25%. That’s well above what fixed deposits or bonds have returned in the same period, typically around 10%. Even in the last year alone, the market has risen nearly 40%. Returns like these show what’s possible when you invest in the right companies.
“Stock market investing deserves a place in anyone’s long-term financial planning because it offers growth that few other assets match.”
But this isn’t just about chasing high numbers. The capital market gives ordinary Sri Lankans a way to take part in the country’s economic growth. It offers access to some of the country’s most successful businesses. These are well-managed, diversified firms with strong fundamentals. Liquidity is relatively high. As such, investors can enter and exit with ease. The key is to approach it with the right mindset. Even if you allocate only part of your portfolio, being consistent and informed can pay off over time.
In your view, how do listed companies generate long-term value through innovation, expansion and sound governance for both investors and the broader economy?
Listed companies play a direct role in building long-term value for their investors and for the wider economy. Unlike private firms, they have access to public capital. Through tools like rights issues, they can raise funds without relying solely on bank loans. This flexibility allows them to invest in growth, modernise operations, or enter new markets.
Individuals are more willing to invest in these companies because they meet higher standards. Their financials are audited, follow disclosure rules, and operate with more transparency. All of that builds confidence.
It’s also why many companies that plan to expand choose to list themselves, knowing that public confidence will help them raise the capital they need. But the impact goes further. When a listed company grows, it hires more people, increases demand across its supply chain, and contributes more in taxes. The benefits extend beyond the shareholder to the broader economy. That’s how capital raised on the exchange turns into real economic activity.
How important is investor education towards strengthening our capital market?
Investor education is fundamental to building a stronger, more resilient capital market. Even though Sri Lanka has a financial literacy rate of around 58%, awareness and understanding of capital markets remain low. Many people still lack knowledge of how the stock market operates or how to make sound, long-term investment decisions. This gap must be closed.
“When a listed company grows, it hires more people, increases demand across its supply chain, and contributes more in taxes. The benefits extend beyond the shareholder to the broader economy.”
Already, the change is underway. Starting in 2026, the Ministry of Education has stated that capital market education will be introduced into the school curriculum. Students from grades 6 to 9 will learn about financial products. By grade 11, they’ll have the option to study the capital market more deeply.
In parallel, the CSE has also launched its own school-level initiatives. In 2023, we supported capital market clubs in 100 schools and ran quiz competitions across all nine provinces.
Beyond schools, we’re reaching adults too. The CSE now runs awareness sessions both online and on the ground. We have branches across all provinces and are working to expand to every district.
The aim is to meet people where they are, answer their questions, and show that investing is a long-term tool towards building wealth. This level of consistent, practical education is what will grow participation and, by extension, build a stronger market.
In what ways is the CSE promoting transparency, expanding accessibility and strengthening investor confidence to be a platform for long-term value creation?
The CSE has made strong progress in building a more transparent, accessible, and investor-friendly market. Strengthening disclosure requirements has been a key part of that. For example, if an insider buys or sells shares, the company must report it within days. That helps protect minority investors and signals accountability. Alongside this, we’ve ensured strict requirements for financial reporting, where listed companies must publish quarterly accounts and submit audited accounts within a fixed timeline.
To support these efforts, the CSE has also introduced stronger compliance systems, where companies that miss filing deadlines face strict penalties. We’ve also introduced the Central Counterparty Clearing (CCP) system to improve security and efficiency—addressing long-standing concerns for foreign investors and improving trust across the board. Collectively, these measures help create a level playing field and assure investors that listed firms follow proper systems. That said, we also recognise the need for balance. If listing becomes too complex, some companies might stay out. So we’re careful to enforce standards without discouraging participation. Ultimately, our responsibility is to safeguard investors while encouraging participation from companies. Getting that balance right is how we build long-term confidence and sustained growth.
“The CSE has made strong progress in building a more transparent, accessible, and investor-friendly market.”
Finally, five years from now, how do you hope the CSE and investor participation in it will look?
Five years from now, I hope to see a deeper, more inclusive market with over 100,000 active investors. This would mean that more citizens are directly participating in the country’s growth, while also building their own long-term financial security. On the supply side, we aim for greater market depth, with a larger and more diverse pool of listed companies.
We’re already laying the groundwork towards these goals. Recent investor forums such as in international markets like Singapore have helped us attract growing interest from foreign investors. Granted, there are always external factors we can’t control. But what we can do is build steadily: expand access, increase transparency, and strengthen governance. I believe CSE’s position will be much better five years from now.