Colombo bourse performing better than regional peers
The Colombo Stock Exchange (CSE) ASPI which dropped to a low point of 10,567 index points in mid-September 2024 on the back of investor uncertainty, rose to 15,945 index points (50 per cent gain) by December 31, 2024. As of March 5, 2025, the ASPI has shown a remarkable year-to-date gain of nearly 40 per cent; making it the best-performing of all stock indices in the region.
Sri Lanka’s stock market price to earnings is at 8.84 multiples with Karachi at 10.83, Philippines Stock Exchange at 10.5, Vietnam Ho Chi Minh Index at 14.15 and Malaysia’s KLCI index at 14.73. In the regional comparison of price to book value valuation, ASPI stands at 1.16, with Karachi Stock Exchange following at 2.01, Philippines Stock Exchange at 1.32, Ho Chi Minh Index at 1.69 and Bursa KLCI index at 1.47.
“The new government remains committed to the IMF programme, which has boosted investor confidence. The conclusion of the external debt restructuring, followed by the sovereign rating upgrades and low interest rates which are expected to bottom out by mid-2025 have all acted as catalysts in booting equity investments,” an analyst explained.
Stockbrokers said that Sri Lanka’s attraction is a low equity capitalisation to GDP ratio, which stood around 15 per cent whereas, for India for example, the same is around 136 per cent as of last year December. This and the favourable valuations indicate strong growth potential to the Columbo stock market, offering high returns for similar or lower risk, a second analyst said.
He said that going forward, the overall positive sentiment, prevailing interest rates and earnings growth, which is expected to be about 20 per cent in listed companies will further boost the market.
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