Global equity interest in emerging markets expected to trickle down to CSE: Ceylon Asset Management

Colombo-Stock-Exchange

Jan 26, 2021 (LBO) – Local investors should exploit attractive valuations of the CSE before a Sri Lanka country rating revision and foreign investor confidence returns to the CSE, a new report says.

“Invest in the Colombo Stock Exchange. Investors should include equity in portfolios during 2021, before PE ratio exceed 15X, ” the Ceylon Asset Management Economic Market Outlook report for the year 2021 said.

It also advises a strong buy for USD Sri Lanka International Sovereign Bonds and exploit 30%+ discount.

“We believe global investors should exploit this unique contrarian investment opportunity pertaining to Sri Lanka International Sovereign Bonds trading at deeply discounted prices and diversify investor risk exposure to reap benefits soon,” it said.

“We are confident that the Government of Sri Lanka will finance the prevailing budget deficit.”

The Central Bank of Sri Lanka expects to maintain low interest rates along with other countries in order to stimulate domestic growth. As a result, we can expect a positive impact on GDP growth in 2021.”

The report adds that the exchange rate will be volatile since the Central Bank of Sri Lanka is currently not in a position to support the LKR considering foreign exchange reserves being at a low level.

However, the foreign exchange market is looking forward to dollar sale SWAPs with forwarding buybacks.

The Central Bank of Sri Lanka assured that they will not allow Sri Lanka’s credit record to be tainted by a Sovereign default or restructure of Sri Lanka International Sovereign Bonds as stated by a few Research Agencies.