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Colombo stocks to further rise after November 14 poll
Colombo’s stock market is predicted to go up further after the general election on November 14, several industry analysts said.
A senior stockbroker told The Sunday Times Business that the new President Anura Kumara Dissanayake has still not incurred major expenses in his office in the past five weeks. “This is seen as a positive. The tourist arrivals are trickling in. The Lankan rupee and the tea exports have strengthened,” he added noting that all these have contributed to investor confidence.
Some stock brokers also observed that the inward remittances by migrant workers have strengthened in the past few months. This has contributed to the rupee strengthening which in turn has built investor confidence, they added. Migrant worker remittances rose to US$4.8 billion in January-September 2024 against $4.3 billion in the same 2023 period. Tourist arrivals rose to 1.48 million arrivals in January-September 2024 compared to 1.0 million in the same months in 2024.
“The government is still not borrowing money for development activities. This is not denting the cash flow,” a second stockbroker observed, Most importantly, he noted that there are no major kickbacks now and the country seems to be free of corruption. They added that this has strengthened foreign direct investor confidence in the country. For example, Transdigm Group, a US engineering technology firm, has made a significant investment of $8.5 million in Sri Lanka in collaboration with AmSafe Bridport, to set up a new facility in the Wathupitiwala Export Processing Zone (EPZ).
An analyst noted that the government discussing digitalising the economy is another bold step for investor confidence. He added that increasingly, tax files being opened are also bolstering foreign direct investments and stock market investor confidence.
However, they added that with the new US President Donald Trump coming into his second term in office, the Federal Reserve is likely to increase interest rates as a result. The US investors will not look at emerging markets such as Sri Lanka. If Trump’s plan to cut taxes and raise tariffs is implemented, it could create upward inflation pressure.
As inflation expectations rise, the Federal Reserve may choose to raise interest rates or maintain higher rates for an extended period to prevent the economy from overheating. This scenario could make saving and certain fixed-income investments more attractive, as investors may receive better returns on savings accounts or bonds.
Analysts also pointed out that with the Trump victory, the Ukraine-Russia war is expected to cease. As a result, oil prices will be stabilised, they added.
https://www.sundaytimes.lk/241110/business-times/colombo-stocks-to-further-rise-after-november-14-poll-577108.html
