Colombo’s share market is seen on an upward momentum but is yet unattractive to foreigners who are cashing in on their investments to lock in profits even after the war ended, analysts say.
“Foreigners are mostly long term investors. Despite the war being over, they are awaiting a clearer direction on the peace situation, how the government will go about it in terms of infrastructure and development, the International Monetary Fund (IMF) loan, etc. As of now their outlook for Sri Lanka is not that good,” a stock market analyst noted.
He said the majority of foreign participation is by Sri Lankan born, US-based fund manager, Raj Rajaratnam and he has been selling. “We have noticed some foreign buying as well, but these are not replacing the funds that are going out,” he added.
However there was some good news. Jim Rogers, chairman of US-based Rogers Holdings, a major investor in Asian stocks and author of several investment-related books, in a recent interview said that stocks in Sri Lanka are the only equities he would consider buying at the moment.
A stockbroker noted that foreigners are exiting the Colombo market as they are concerned about the currency stabilisation and the confidence factor. “They are aggressive sellers so far, because they are losing confidence.”
Another analyst noted that Sri Lanka cannot depend on ‘one or two’ foreign interests. “With the share price increases, foreigners got out of the Colombo market. They are clearly having cash constraints because these investors are in the midst of a recession. During the last two months they may have made about 30% on their investments, which is a good rate of return,” he explained, noting that this however does not mean they will remain as net sellers. He said that within a few months the country will see the IMF loan, backed by some good results in the fourth quarter earnings which will see foreigners returning to the local market.
The stockbroker was also confident that towards the end of the year they will start buying. “They will start comparing Sri Lanka with other emerging markets, which will give them reasons to come in here a couple of months down the line,” he said.
|
E-mail