July 5, 2019 (LBO) – The Colombo Stock Exchange (CSE) had one of its better weeks in recent memory with both major indices notching impressive gains for the week.
The All Share Price Index (ASPI), a market cap weighted index of all listed stocks on the CSE, finished the week up 2.5%.
The S&P SL 20, an index of 20 large cap companies, finished up an even more impressive 4% on the week.
Turnover on the bourse was light, with an average trading of just Rs550mn (US$3mn) per day. Foreigners were net sellers of Rs600mn (US$3.5mn) worth of stock during the five day trading period.
There was positive action in Sri Lanka’s market bellwether John Keells Holdings (JKH) with the stock closing the week at over Rs145/share. Banks also performed well.
Sri Lanka’s stocks have had a terrible year with the ASPI down 9% for 2019, and the S&P SL 20 down a staggering 17%.
The year has been plagued with political, administrative and terrorist crises, coupled with a faltering economy. However, despite the negativity, Sri Lanka will still register positive GDP growth of 2-3% for 2019.
All is certainly not as bad as it seems. Presidential elections and the resultant political stability are in sight as we approach the end of the year. Interest rates are being reduced to help stimulate the economy, and stock market valuations are cheap. The market trades at a PE ratio of less than 9 and a price to book ratio of just 1.
Sri Lanka’s economy is recovering from a political crisis, an economic downturn, and global terrorist attacks. Considering the shocks that the economy has taken, its growth trajectory is not at all bad. Many analysts are predicting an economic and stock market upturn as we approach the end of the year.