Sri Lanka stock market records 8-pct gain in 1H

July 18, 2017 (LBO) – The benchmark All Share Price Index of the Colombo Stock Exchange (CSE) recorded an 8.23 percent gain year-to-date, a noteworthy turnaround in the first half of this year, having started the year on the back of a slow-moving 2016.

The S&P SL 20 index, which features the CSE’s 20 largest and most liquid stocks, has also improved consistently, making an 11.03 percent gain year-to-date.

The CSE said the growth of the indices in 2017 reflects a reversal of the declining trend from a 9.66 percent and 5.54 percent decline in the benchmark ASPI in 2016 and 2015 respectively.

Overall trading activity has also improved in 2017, with the daily average turnover recorded for year-to-date marking an improvement to 911 million rupees from 737 million rupees in 2016.

The market in 2017 has also garnered a keen interest among foreign investors, with net foreign inflows for 24 consecutive weeks recorded from the first week of February onwards.

The foreign purchases figure recorded for the first half of 2016 (January – June) amounting to 31.5 billion rupees has doubled during the first half of 2017 to 62.6 billion rupees, an all-time high for foreign purchases in the first half of a calendar year.

2017 so far, has marked a net foreign inflow of 23 billion rupees, an improvement compared to previous years, which recorded an inflow of 383.5 million rupees in 2016 and an outflow of 5.3 billion in 2015.

“Growth in foreign activity is certainly encouraging and goes on to indicate that foreign investors have identified an opportunity in the Sri Lankan stock market,” CSE CEO Rajeeva Bandaranaike said.

“Such interest is an expression of confidence in the future potential and growth of our market and makes a strong case for improved involvement among local institutional and retail investors.”

Foreign investor contribution to total turnover in 2017 stands at 47 percent, an improvement in comparison with 42 percent in 2016 and 34 percent in 2015 and having crossed the 50 percent mark for the first time since 2008 in April this year.

The CSE said an attractive market valuation (P/E) compared to regional peers, growing corporate earnings among listed entities and a strong performance of the ASPI compared to leading indices are defining factors in attracting foreign investments to the Sri Lankan capital market.

January – June Foreign Activity Comparison 2008 – 2017

Jan – Jun 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Foreign Purchases 51.9 15.9 42.6 31.2 38.3 53.4 43.3 36.8 31.5 62.6
Foreign Sales 47.1 16.4 59.6 38.6 15.1 38.3 37.6 35.3 37.8 41.1
Net 4.7 -0.5 -16.9 -7.4 23.2 15.1 5.7 1.5 -6.3 21.5