US Biden win would attract foreign interest for CSE
View(s):Sri Lanka following the landslide victory by the Sri Lanka Podujana Peramuna (SLPP), has improved the investor climate in the share market with institutional investors being active, showing interest in blue-chip counters.
The concern however is in the declining foreign purchases – only Rs. 30 million out of a total turnover of Rs. 2 billion on Thursday, analysts said. Foreigners sold Rs. 294 million worth of shares.
As long as interest rates remain low there will be continued interest for equities from local investors, Mattias Martinsson, CEO/CIO of Tundra Fonder in Stockholm, told the Business Times. “Although it seems to be slowing down, foreign investors are likely to continue selling until there is a general increase in appetite for emerging and frontier markets. Here we think a Joe Biden win in the US in November could be a trigger for that.”
He said foreign investors’ main concern for Sri Lanka is debt levels and specifically debt rollover. “I would assume the political leadership will try to grow their way out of the debt trap, that is grow the denominator rather than reduce the numerator – something which foreign investors are not used to in markets like Sri Lanka (although accepted in developed markets as we all know). Personally I believe it is the right decision, just as it has been in developed markets. It will take Sri Lanka some time to prove their point though.”
The SLPP election result is a big positive for the country, Ruchir Desai, Co-manager of the AFC Asia Frontier Fund at Asia Frontier Capital said. “In the past a majority government has been good for investor and business sentiment.” The Colombo Stock Exchange should look at ways on how to increase market liquidity as there are some very attractive companies but they remain illiquid for investors to access easily, he also added.
(DEC)