Business Times

Shares inflated? Invest in the ‘real economy’

Sri Lanka’s share market appears to be overheated at present which is why some analysts suggest investors put in their money in property, private equity or invest on the ground for new businesses.
“Most counters on the stock market are overheated right now and some suggest that it is best to invest in the ‘real economy’ instead of the financial one (such as the shares), as the financial economy is now running way ahead of itself,” an analyst said.

Another analyst agreed, saying that many high networth individuals are looking increasingly at projects and private companies to invest. “Many investors visiting Sri Lanka are also more interested in private investments rather than the market. But for the common man there are no vehicles to gain exposure in private investments. We don’t have vehicles like Real Estate Investment Trust and private equity funds, which may be why they are hesitant,” he said. However, some disagree.

Milinda Ratnayake, Analyst SMB Securities said that the property market hasn’t picked up as expected and there are opportunities for bargain hunters and retailers “The best thing is to have a diversified portfolio that suits the individual instead of choosing between financial and real (economies),” he noted.
Chitra Sathkumara, CEO Ceybank Asset Management noted that at present, the financial economy reflects people’s expectations. “The post-war Sri Lanka is different to that of what we grew up with.

This is the main reason why we are still not in a position to visualize what it can be in 3-years time. Imagine new freeways, new railways, two to three airports, several harbours, new hotels, more than two million tourists, new shopping complexes, buildings, etc,” he said, noting that the financial economy is not running way ahead of itself and that it’s a leading indicator based on people’s expectations.

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