Q: What is First Capital’s investment advice in the current context?
Anjelo Simmons (AS): In the current economic environment, government securities-related products and offerings are the safest investment options available, and we are striving to keep offering impressive rates on these products.
Our suite includes treasury bill and treasury bond investments, with rates as high as 24 percent on the one-year treasury bill and 21 percent on the five years bonds and Repo investments in the range of 20-24 percent for monthly to one-year investments. However, due to the nature of these instruments, a minimum investment of Rs. 1 million is required.
Kavin Karunamoorthy (KK): For investors looking for more flexibility and agility, we offer the First Capital Gilt Edged Fund, which invests in short-term government securities and can be operated like a savings account.
We facilitate withdrawals at request with no penalties and provide 24/7 access to sign up and manage your funds. This unit trust fund operates as a pooling vehicle where funds from multiple investors are gathered and invested to provide attractive returns to unit holders.
Currently, the fund offers 20.46 percent per annum for 30 day annualised return. Clients enjoy the added advantage of seamlessly switching between investment offerings and asset classes to better navigate dynamic market movements, and eliminate opportunity and financial costs.
Q: Can you elaborate on First Capital’s decision to broad base access to the government securities market?
AS: As a result of the monetary policy easing due to the pandemic, interest rates on government securities fell to a record low of almost five percent. Due to the econo-mic crisis, rates have risen above 20 percent – we haven’t seen anything like this since 2008 during the height of the civil conflict and the global financial crisis. This shift has resulted in a huge demand for government securities.
First Capital recognised this as an opportunity to provide a solution for clients who are searching for better returns by marketing government securities even among retailers. We were able to acquire large volumes through new clients by offering attractive returns.
Q: How does First Capital differentiate itself?
AS: Creating a platform for all Sri Lankans to enjoy access to the financial market is important to us. As the largest stand-alone non-bank primary dealer, we take it upon ourselves to develop the government securities market through awareness building and education.
In the past, this asset class hadn’t seen much retail participation and so we simplified the product by offering repurchase investments for retail clients. The response was overwhelming due to the accessibility and attractive returns, and we have managed to sign on and service over 1,000 new accounts.
KK: Since client centricity, enhancing access and providing convenience is key to our operation, we have put in place digitalisation initiatives and the required infrastructure. We were the first to introduce digital onboarding for unit trusts and government securities in Sri Lanka, and were able to successfully onboard, educate and service this large retail base with ease.
Our clients trust us immensely, and we uphold their confidence by safeguarding and growing their investments. First Capital’s investment decisions and advice are based on knowledge and solid research, which is further scrutinised by our investment committee that comprises nationally recognised economists and accountants.
The forecasts are highly accurate due to our expertise and experience. Our research unit is a significant source of strength, and it helps ensure that our decisions are timely, sound and accessible to the wider public.
KK: In addition to the ripple effects of global events, Sri Lanka is facing its own set of unprecedented sociopolitical and macroeconomic challenges.
Discussions are ongoing with the IMF, and negotiations for a staff level agreement are underway for the implementation of a credible and coherent strategy to restore macroeconomic stability. Further advancement has been made in debt restructuring with progressive discussions being held between the authorities and appointed advisors.
Though the debt restructuring process may take several months, we anticipate that it will lead to the containment of debt at a sustainable level and a lower cost to the country and its creditors.
Q: Given the prevailing business environment, what are your priori-ties?
Our strong fundamentals, the dedication of our teams and the backing of the Janashakthi Group have enabled us to remain resilient through challenging market cycles.
We will continue to support vulnerable communities through the Janashakthi Foundation, which is the philanthropic arm of the Janashakthi Group and also our CSR efforts with Habitat for Humanity Sri Lanka.