ECONOMYNEXT – Sri Lanka’s main stock index in the Colombo Stock Exchange has seen more than 35 percent growth and the daily turnover has more than doubled since the presidential election and analysts cites the return of confidence as the key reason.
The main All Share Price Index (ASPI) has gained 35 percent since Anura Kumara Dissanayake was elected as the president through December 23 close, the official data showed.
The average daily turnover, which was 1.49 billion before the September 21 election has more than doubled to 3.74 billion rupees after the election.
“More than the election, it is about uncertainties going out of the window,” Dimantha Mathew, Chief Research & Strategy Officer at First Capital Holdings PLC, told EconomyNext.
“There were political and policy level uncertainties. There were also uncertainties over the continuity of the IMF programme and the completion of the debt restructuring. However, they have been managed well. With that, the investor confidence has significantly improved.”
“Falling interest rates also have contributed to the current situation. The investor mindset has changed and now they see the equity market as an avenue for higher return.”
However, the market has been mainly boosted by local buying with foreign investors still on the selling side, the official data showed.
The bourse which had suffered a 5.3 billion foreign outflow up September 20 this year has extended the offshore selling by another 4.23 billion rupees under Dissanayake government.
Analysts, however, say the market has still room to grow.
“The index gain is also because investors see increased corporate profitability,” Mathew said.
“Our valuation is around 9 times. This means our stocks are still cheaper. But, of course we are still not out of woods.” (Colombo/December 23/2024)
