Foreign investor bond exodus nears $ 300mn; Colombo stocks close week near multiyear lows

August 25, 2018 (LBO) – The Colombo Stock Exchange ended the week near unchanged as indices approach key technical levels.  The All Share Price Index (ASPI) finished near unchanged for the week 6052, while the S&P SL 20 closed near unchanged at 3212.  Brokers indicate that the 6000 level on the ASPI is being closely watched by market participants, and a break below that level is likely to negatively affect market psychology.

Year to date the indices have been trading in line with global trends of emerging market weakness.

Year to date for 2018, the ASPI is down near 5%, while the S&P SL 20 is down a more significant 12.5%.

Foreigners have been selling stocks and bonds in Sri Lanka this year.  On a net basis foreigners have sold close to US$22mn worth of equities, while bonds have experienced outflows nearing US$300mn for the year.

Image courtesy of Sanjeewa Dayarathne

Stocks are starting look very cheap, with an aggregate market PE of 9.42, and many stocks trading at just fractions of their book value.  Despite what look like attractive valuations, brokers say there is little interest in Sri Lanka’s stock market.