Colombo bourse world’s best performing… so far

Investors getting bullish; Return up 20%, Market cap soars by Rs. 100 b

Colombo bourse which suffered one of its worst years in 2008, has begun to make global headlines thanks to being the best performing market in the New Year.

Analysts said that with All Share, Milanka price indices and market capitalization up by over 20%, Colombo stock market has provided the best return year to date.

In 2008, Colombo bourse saw Rs. 198 billion in value wiped off as market capitalization dipped by 41% to end the year at Rs. 488.8 billion. However by yesterday it had risen by Rs. 100 billion to close at Rs. 588.7 billion.

Analysts said that investors, especially locals, were getting bullish over probable turnaround in prospects for both the country and company earnings on an anticipated early finish to war against terrorism in the North.

Improved prospects for certain sectors such as plantation, diversified and financial services as well as certain liquid select stocks have sparked renewed buying as well.

A likely decline in interest rates and inflation expectation has also made equities more attractive.

Other analysts however warned that Sri Lankan economy is fundamentally in crisis and vulnerable. This coupled with continued global meltdown would make Lankan economy’s turnaround as well as that of company earnings unlikely in the short to medium term despite further success in military operations, which in had been already factored in previously.

“The economy needs a greater stimulous, confidence and this hasn’t happened despite announcements made,” these analysts added.