Lankan firms in leisure, banking and manufacturing sectors will attract growth next year, according to stock market analysts.
Arjuna Dissanayake, Vice President Acuity Stockbrokers said the main sectors that will see growth will be the leisure sector, together with the manufacturing sector catering mainly to the construction industries like cement, tiles and cables.
“The leisure sector will have an advantage with the currant environment due to the existing infrastructure and will be geared to maximize return on the expected tourism boom,” he said, adding that the primarily reason is the construction and infrastructure development seen around the island together with new projects and expected interest on housing due to reduction in interest rates.
Waruna Singappuli, Head of Research NDB Stockbrokers said that hotels will see their occupancy rates and room rates increasing significantly. He said that foreign investors are bullish on the banking sector in order to get an exposure to the overall economy while the post war development activities across the country will see the manufacturing sector attracting growth. “Demand for property and rates could be expected to increase gradually and will result in increase in demand for property shares,” he said.
Charuka Suchendra, Research Analyst Asha Phillip noted that more investors would go for borrowings to finance their investments through credit capital (as the interest rates are low now) financed by the bank loans and leasing which will help banks to enhance their profitability. “Stability in foreign exchange rates due to the IMF facility would give more confidence to the banking sector to participate in foreign currency transactions with foreign exchange risk,” he said, adding that stable banks who own liquidity will capitalize on the upcoming opportunities in the economy.
He noted that new power projects, highways, airports and other constructions are expected to be taken place with foreign subsidiaries. “Therefore manufacturing firms will be driven by the construction boom in the economy in the coming year. Listed firms such as Tokyo Cement and ACL Cables will be heavily benefited.”
He noted that presently most hotels are making losses but the current and potential growth in tourist arrivals will boost the momentum in this sector. “Hotels situated in Colombo city limits will perform firstly due to business clients and the outstation hotels are expected to perform from the middle of the year from tourist arrivals,” he noted, adding that counters such as Asian Hotels and Properties PLC, Trans Asia PLC, Aitken Spence Hotels Holdings PLC and Keells Hotels Holdings would benefit most in the market.
Yadhavan Jeyaram, Manager Sales, Bartleet Mallory Stockbrokers noted that apart from all these sectors the palm oil sector is expected to post strong earnings if the global palm oil prices maintained its growth momentum following the escalating crude oil prices. "The crude oil price was US$ 40 a barrel in Jan 2009 and today it's US$ 80 a barrel. The demand for crude oil is primarily driven by increasing demand from vibrant economies like China and India," he said, adding that Carsons Group, a giant in the palm oil sector witnessed a significant upswing in the bottom line with soaring palm oil prices in 2008.