ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange officials are optimistic about the market performance this year after more than 30 percent drop last year amid rising uncertainty over possible local debt restructuring.
President Ranil Wickremesinghe’s government has yet to decide if it would go for local debt restructuring. But such a move could trigger a banking sector collapse and drag the risky assets this year, market analysts say.
Dilshan Weerasekera, the chairman of the Colombo Stock Exchange said the market is attractive due to lower valuation this year after a 30.6 percent fall in 2022.
“The valuation is lower to 1 time price to earning and 5 times trailing earning,” Weerasekara told a media briefing on Wednesday.
The 3.7 trillion worth market saw a record 51 billion rupee foreign inflows last year despite the fall, the official data showed.
The bourse expects to introduce new dent products this year including green, blue, perpetual, and high yielding bonds to attract more investments.
The island nation is struggling with its external debt restructuring efforts after it declared sovereign debt default in April last year.
Weerasekera, however, said a foreign only debt restructuring will have a positive impact on the market as the risks of such restructuring are already priced in. (Colombo/Jan12/2023)