Sri Lanka’s stocks move up, but foreigners sell Rs1.5bn ahead of Presidential election

November 13, 2019 (LBO) – Sri Lanka’s stock market was strong ahead of Sri Lanka’s impending Presidential election to be held on Saturday November 16th.

The Colombo Stock Exchange (CSE) major indices were up roughly .5% on relatively heavy turnover of Rs2bn (US$11mn). However, despite what appeared to be positive sentiments, foreigners took the other side of the trade with net foreign selling of Rs1.5bn (US$8mn).

Local investors have been optimistic about a stock market rally after elections. The frontrunner in the election, former Defence Secretary Gotabaya Rajapaksa, is seen as very market friendly.

However, as the Presidential race has come to a close, many political analysts claim that the race has tightened with no major candidate expected to get a mandate of more than 50%.

The unpredictability of the Presidential race is evidenced in the lack of trading in the stock market. Investors appear to be taking a wait and see attitude with the market trending in a relatively narrow range since the election was declared.

Sri Lanka’s economy is slowing recovering from the recent Easter Sunday terror attacks, with tourism industry figures improving significantly. The stock market appears cheap with stock in aggregate trading around a 10 PE, and a price to book of 1.