ECONOMYNEXT – Sri Lanka’s stocks were the best performing exchange in the world rising 12 percent, the Colombo Stock Exchange said.
Sri Lanka has seen record excess liquidity from money printed by the central bank, driving rates down, which tends to increase the present value of longer term assets.
However the underlying domestic economy is also recovering with effective Coronavirus control.
“The continued low interest rate environment has led to more financial assets being moved from low yielding fixed income assets into the share market and we expect that to continue into the coming months,” CSE Chairman Dumith Fernando said in a statement.
“We have also witnessed much stronger confidence levels in the earnings growth of listed corporates as a result of the post-COVID bounce back and lower financing costs.Companies are being rewarded by investors who continue to expect strong earnings in coming quarters.”
Sri Lank has seen record levels of excess liquidity in money markets but private credit has been negative up to August.
The liquidity injections have come despite sovereign credit downgrades and need to maintain monetary stability to repay foreign debt. (Colombo/Oct03/2020)