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Written by Azhar Razak
Saturday, 31 December 2011 18:20
Stock market to recover by mid-2012, but economy’s dependency on remittances to continue, analysts predict.
Continuing with the buoyancy in the economy following the end of the war in mid-2009, Sri Lanka’s tourism and banking sectors are expected to lead the growth momentum in the year 2012 as well, predicts a recent research report. This report titled ‘Year 2011 Round Up’ prepared by TKS Securities (Pvt) Ltd states that with the growth in the broader economy, all sectors would benefit considerably in the year 2012 when compared to the past years, though tourism and banking sectors would be the stand outs.
“Tourism is the prime beneficiary of the end of the terrorist conflict and we are set to achieve around 900,000 tourists in 2012, with the rapid increase in tourist arrivals also complemented by the new airlines and increased seat capacity to the country. ARRs are also on the rise on par with the boom in the industry,” the report stated.
It added that with the expected economic growth and favourable macro outlook, with low interest rates and low inflation together with new tax reforms and private sector credit growth picking up, the banking sector would also perform above expectations in 2012.
“The resurgence of the country can be mirrored through the impressive corporate earnings posted from December 2009, where the earnings grew by 22% YoY to Rs. 119.1bn in 1-3Q2011. Banking and Finance and Diversified sectors have been the chief contributor to the sector with a contribution of 9%,” the TKS report noted.
It said that thanks to the peace dividend, the trade with the North and East that had so far been muffled would play a significant role in the mainstream economy in 2012 and would increase the domestic demand and expand the available market space.
“Hence, we believe the retail/consumer sectors would benefit significantly,” the report highlighted.
Meanwhile, on the capital market front, it said that the broad market has now stepped down to a very attractive valuation plane of 14 times and invites investors of all categories to come out of their shells and explore the opportunities presented.
“Further, the continued macro-economic scenario, political stability and the government’s interventions to console the market turbulence have set the pace for the market to ascend on a fresh note in 2012,” this report stated.
It stated that since the corporate earnings are expected to grow by around 30% YoY in 2011, this would further strengthen the market outlook.
“Hence, we expect the market to fully recover by mid-2012 on the back of the cautious approach adopted by investors in testing the market after all the pain endured during 2011,” the report noted.
Commenting on the external front, the report added that since rising global prices, especially of food items and petroleum, as well as high domestic demand, are expected to push up imports by around 38% YoY in 2012, higher remittances and net services receipts are expected to hold the current account deficit in the medium term. The report predicted that export performance is likely to grow by around 22% YoY in 2012 although it will depend on the recovery in Sri Lanka’s major markets.
http://www.nation.lk/edition/index.php/business/item/702-tourism-banking-to-lead-growth-in-2012
Saturday, 31 December 2011 18:20
Stock market to recover by mid-2012, but economy’s dependency on remittances to continue, analysts predict.
Continuing with the buoyancy in the economy following the end of the war in mid-2009, Sri Lanka’s tourism and banking sectors are expected to lead the growth momentum in the year 2012 as well, predicts a recent research report. This report titled ‘Year 2011 Round Up’ prepared by TKS Securities (Pvt) Ltd states that with the growth in the broader economy, all sectors would benefit considerably in the year 2012 when compared to the past years, though tourism and banking sectors would be the stand outs.
“Tourism is the prime beneficiary of the end of the terrorist conflict and we are set to achieve around 900,000 tourists in 2012, with the rapid increase in tourist arrivals also complemented by the new airlines and increased seat capacity to the country. ARRs are also on the rise on par with the boom in the industry,” the report stated.
It added that with the expected economic growth and favourable macro outlook, with low interest rates and low inflation together with new tax reforms and private sector credit growth picking up, the banking sector would also perform above expectations in 2012.
“The resurgence of the country can be mirrored through the impressive corporate earnings posted from December 2009, where the earnings grew by 22% YoY to Rs. 119.1bn in 1-3Q2011. Banking and Finance and Diversified sectors have been the chief contributor to the sector with a contribution of 9%,” the TKS report noted.
It said that thanks to the peace dividend, the trade with the North and East that had so far been muffled would play a significant role in the mainstream economy in 2012 and would increase the domestic demand and expand the available market space.
“Hence, we believe the retail/consumer sectors would benefit significantly,” the report highlighted.
Meanwhile, on the capital market front, it said that the broad market has now stepped down to a very attractive valuation plane of 14 times and invites investors of all categories to come out of their shells and explore the opportunities presented.
“Further, the continued macro-economic scenario, political stability and the government’s interventions to console the market turbulence have set the pace for the market to ascend on a fresh note in 2012,” this report stated.
It stated that since the corporate earnings are expected to grow by around 30% YoY in 2011, this would further strengthen the market outlook.
“Hence, we expect the market to fully recover by mid-2012 on the back of the cautious approach adopted by investors in testing the market after all the pain endured during 2011,” the report noted.
Commenting on the external front, the report added that since rising global prices, especially of food items and petroleum, as well as high domestic demand, are expected to push up imports by around 38% YoY in 2012, higher remittances and net services receipts are expected to hold the current account deficit in the medium term. The report predicted that export performance is likely to grow by around 22% YoY in 2012 although it will depend on the recovery in Sri Lanka’s major markets.
http://www.nation.lk/edition/index.php/business/item/702-tourism-banking-to-lead-growth-in-2012
