- Performance best in region
- Increase of 36 percent upto June
Sri Lanka’s share market has been the best compared to any country in the world, during the first half of 2010. When share markets across the world recorded one percent to two percent increase as a result of recovering from the economic recession, Sri Lanka recorded a 36 percent increase from January to June this year, Capital Reach Research Manager, Sarath Rajapakse said.
 The Colombo stock market |
Apart from the tourist sector, plantations, insurance and finance sector especially banks have recorded a positive growth in the share market, he said.
At the moment the market is driven by local investors. Banking sector shares have also gone up. With the expansion of the branch network to cater to North and East, banks will attract more borrowings. The process has already begun. The public have started taking shares anticipating the sector to flourish, he said.
Rajapakse said the banking sector is a cartel in Sri Lanka and it is not easy for foreign banks to establish here. The plantation sector too is extremely profitable and with the signing of the collective agreement in the latter part of 2009, the sector could forecast a trouble free three-year period to focus on growth, he said.
Acuity Stock Brokers Research Manager Saminda Weerasinghe said a significant portion of shares has been taken from smaller stocks, since ours is a retail-driven market. March 2009 to March 2010 growth is 204 percent. Total market capital is Rs 1.5 trillion.
He said the post war era has created a good earning potential for a majority of the companies. Fastest earnings came from hotels and the travel sector, a 200 percent earnings growth compared to last quarter.
Dialog coming into positive territory recording a positive growth in the first quarter too is a big boost to the telecom sector becoming a potential milch cow.
Foreign investors are yet to come in significant numbers and the momentum is gaining, Weerasinghe said.
He said the rupee is now appreciating and whether this trend will support share issuing process is a ‘yes and no situation.’ “Though it is good for imports, it could be detrimental for exports.” Sri Lanka can flourish with tourism. Now we are on par with Maldives. It is forecast, 600,000 tourists will arrive in this year and 2.5 million in 2015.
Compared to Malaysia, Indonesia and India, the numbers we attract at present are very low. Sri Lanka as a country is rich of places of tourist attraction and we must capitalize on this sector as it could give a lot of spin-offs he said.
It will boost the businesses of support services to this sector as well. Aitken Spence and Keells are forging in the right direction expanding the hotel network at present.
Bartleet Mallory Stock Brokers Research Manager Rakshitha Perera said a war free country has opened doors for banks to expand their branch network and operations.
Increased remittances by the public due to expansion of operations in North and East has seen commission income going up.
Deposit growth means credit growth for banks. The banks could also generate a sound float interest.
Credit growth expansion will help the diversified sector to expand and grow. Tourist arrivals is 40 percent higher now on year to year basis. There are limitations in terms of capacity to cater to this boom in tourist business.
In the next two to three years, 9000 new rooms will be in place. Current earnings from the sector cannot be considered as profits and the tourist industry will take at least another one year to show profits, he said.
source - www.dailynews.lk
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