(Bloomberg) -- Sri Lanka is seeking to boost foreign participation in the island nation’s shares after a 53% rally put local shares among Asia’s top performers this year.
The MSCI’s country gauge is on track to outperform frontier market peers by its widest margin since 2009, as concerns over economic growth and debt restructuring fade. The nation’s new leftist leader Anura Kumara Dissanayake has assured his administration will continue with International Monetary Fund’s loan program while ensuring stability is a priority.
“With confidence back in our economy and stability on the political front, we would like to invite foreign investors to our markets,” said Niroshan Wijesundere, a senior vice president of marketing at the Colombo Stock Exchange said in an interview.
The bourse plans to hold a conference in the national capital on March 27-28 to attract overseas investors. The event will likely be attended by the president Dissanayake, the central bank governor and fund managers focusing on frontier markets, Wijesundere said.
Foreign investor participation in Sri Lankan shares is showing signs of recovery, following a decline in recent years due to worries over the country’s ability to implement reforms and handle debt obligations. Global investors accounted for about 10% of the country’s stock turnover this year, more than doubling the 2021 level, although sharply below the 44% peak in 2018, according to exchange data.
Despite the rally, domestic shares trade at less than 10 times their one-year forward earnings, in line with its long-term average, according to Dimantha Mathew, chief research and strategy officer at First Capital Holdings Plc in Colombo. “This coupled with improved macroeconomic outlook should convince foreigners to invest.”
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